Modern  Business 


A   SERIES   OF    TEXTS    PREPARED    AS 

PART   OF  THE   MODERN  BUSINESS 

COURSE  AND  SERVICE  OF  THE 

ALEXANDER  HAMILTON 

INSTITUTE 


ALEXANDER  HAMILTON  INSTITUTE 
NEW  YORK 


Modern  Business 

Editor-in-Chief 

JOSEPH  FRENCH  JOHNSON 

Dean,  New  York  University  School  of  Commerce,  Accounts  and  Finance 

Associate  Editors: 
PETER  P.  WAHLSTAD,  ROLAND  P.  FALKNER 


Titles  Authors 

BUSINESS  AND  THE  MAN  .......  Joseph  French  Johnson 

ECONOMY  or  BCS.NESS  .......  {^I'^lf™" 

ORGANIZATION  AND  CONTROL      .....  Charles  W.Gerstenber- 

FACTORY  AND  OFFICE  ADMINISTRATION      .      .  Lee  Galloway 

MARKETING  METHODS      .......  Ralph  Starr  Butler 

ADVERTISING  PRINCIPLES  .......  Herbert  F.  De  Bower 

SALESMANSHIP  AND  SALES  MANAGEMENT     .      .  John  G.  Jones 

CREDIT  AND  THE  CREDIT  MAN    .....  Peter  P.  Wahlstad 

ACCOUNTING  PRINCIPLES  .......  Thomas  W.  Mitchell 

COST  FINDING  ......      ....  Dexter  S.  Kimball 

CORPORATION  FINANCE     .......  William  H.  Walker 

BUSINESS  CORRESPONDENCE     ......  Harrison  McJohnston 

ADVERTISING  CAMPAIGNS  .......  Mac  Martin 

INLAND  TRAFFIC    .........  Simon  J.  McLean 

FOREIGN  TRADE  AND  SHIPPING  .....  Erich  W.  Zimmermann 

BANKING  PRINCIPLES  AND  PRACTICE      .      .      .  E.L.Stewart  Patterson 

DOMESTIC  AND  FOREIGN  EXCHANGE        .      .      .  E.L.  Stewart  Patterson 


MERCHANDISING     .........  John  B.  Swinney 

THE  EXCHANGES  AND  SPECULATION  ....  Albert  W.  Atwood 

ACCOUNTING  PRACTICE  AND  AUDITING  .      .      .  John  T.  Madden 

FINANCIAL  AND  BUSINESS  STATEMENTS  .      .      .  Leo  Greendlinger 

INVESTMENT      .......      ...  Edward  D.  Jones 

COMMERCIAL  LAW  Walter  S.  Johnson 


FACTORY  AND 
OFFICE  ADMINISTRATION 


BY 

LEE  GALLOWAY,  PH.D. 

Associate  Professor  of  Commerce  and  Industry 
New  York  University  School  of  Com- 
merce, Accounts  and  Finance 


MODERN  BUSINESS 

VOLUME    4 


ALEXANDER  HAMILTON  INSTITUTE 
NEW  YORK 


COPYRIGHT,  1918,  BY 

ALEXANDER  HAMILTON  INSTITUTE 


COPYRIGHT  IN  GREAT  BRITAIN,  1918,  BY 

ALEXANDER  HAMILTON  INSTITUTE 


The  title  and  contents  of  this  volume, 
as  well  as  the  business  growing  out  of 
it,  are  further  protected  by  laws  re- 
lating to  trade  marks  and  unfair  trade. 

AH  rights  reserved,  including  transla- 
tion into  Scandinavian. 


Registered  trade  mark,  Reg.  U.  S.  Pat.  Off., 
Marca  Registrada,  M.  de  F. 

Made  in  U.  S.  A. 


PREFACE 

Wilbur  Wright  once  said  that  out  of  the  sixty  sec- 
onds in  a  minute  an  aviator  is  busily  engaged  for  fifty- 
nine  in  keeping  his  machine  on  an  even  keel.  A  fly- 
ing machine  must  always  move  in  order  to  stay  aloft. 
If  it  stops  it  falls. 

Movement  and  balance  are  the  two  cardinal  ele- 
ments in  a  science  of  business  administration;  and 
eternal  vigilance  is  the  price  which  every  manager 
must  pay  for  progress  in  his  business,  and  efficiency 
which  comes  from  running  smoothly. 

In  this  book  we  are  concerned  primarily  with  the 
working  of  these  principles  in  their  application  to  the 
factory  and  the  office.  And  while  the  main  princi- 
ples of  management  here  laid  down  apply  as  well  to 
other  fields  of  business  administration,  their  applica- 
tion is  confined  here  to  the  functions  of  production  and 
to  those  functions  which  coordinate  the  various  activi- 
ties necessary  to  promote  accuracy  and  harmony  in 
operations  between  departments,  between  men  and  be- 
tween production  and  distribution  elements  of  busi- 
ness, i.  e.,  the  office. 

Sometimes  a  book  can  be  described  best  by  telling 
what  it  is  not.  This  is  especially  true  where  the  point 
of  view  in  the  book  is  new.  The  exposition  of  the 


vi  PREFACE 

principles  of  administration  as  they  have  been  deduced 
from  many  kinds  of  social  activity  to  the  special  field 
of  business  relations,  has  not  been  the  usual  method 
of  presenting  this  subject. 

Most  books  emphasise  system  and  make  only  in- 
cidental reference  to  fundamental  principles  as  may 
come  from  consigning  this  or  that  activity  to  the 
category  of  "good  practice." 

We  have  taken  the  opposite  method  of  approach 
and  recommend  as  good  practice  only  those  activities 
which  conform  to  basic  principles.  By  this  method 
we  have  been  able  often  to  include  both  factory  and 
office  practice  under  the  same  general  classification, 
and  thus  to  eliminate  the  repetition  which  would  come 
from  treating  each  entirely  separately. 

The  causes  of  industrial  inefficiency  appear  to  the 
author  to  be  mental  laziness,  prejudice  against  so- 
called  nonproductive  labor  and  lack  of  foresight. 
Most  men  dislike  to  think,  to  risk  money  which  does 
not  go  into  assets  which  have  value  in  case  the  enter- 
prise is  abandoned,  or  to  balance  the  profits  due  to 
future  savings  against  the  immediate  outlay.  In  pre- 
senting the  material  the  author  has  had  in  mind  these 
obstacles  to  the  ready  acceptance  of  the  principles 
and  methods  of  modern  business  administration. 

LEE  GALLOWAY. 
New  York. 


TABLE  OF  CONTENTS 
CHAPTER  I 

THE  ERA  OF  THE  ADMINISTRATOR 

SECTION  PAGE 

1.  Growth  of  Industrial  Establishments  ....  1 

2.  Private  and  Public  Administration      ....  2 

3.  Need    of   Sound   Business    Methods   Not   Always 

Realized 3 

4t.     Weight  of  Personality 4 

5.  Weight  of  Economic  Forces 4 

6.  Opportunities  of  the  Present     ....       .       .  5 

7.  Importance  of  Knowing  the  Social  Trend       .      .  6 

8.  Specialization  Develops  Organizing  Ability     .       .  7 

9.  Need  for  Leadership .  8 

10.  What  Is  Administration? 8 

11.  Test  of  the  Administrative  Function  ....  9 

12.  Thought,  the  Basis  of  Administration       .      .      .11 


CHAPTER  II 

PLANNING 

1.  Administration  in  Peace  and  War 14> 

2.  Napoleon's  Success  Due  to  Administrative  Plan- 

ning       15 

3.  Napoleon,  Planner  as  well  as  Dictator     ...  15 

4.  Planning  Adjusts  Details  to  Principles      ...  16 

5.  Collaboration  in  Planning 17 

6.  Lesson  of  These  Analogies 18 

vii 


viii      FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

7.  Newer  Methods  Make  Slow  Progress  ....  19 

8.  Pressure  of  General  Economic  Problems  ...  21 

CHAPTER  III 

EXECUTIVE  ORDERS 

1.  Orders:    The  Result  of  Planning 24 

2.  Fundamentals  in  Organization 25 

3.  Organization  of  Executive  Work 26 

4.  Classes  of  Orders 27 

5.  An  Example  of  General  Orders 27 

6.  General  Orders  Converted  into  Special  Orders     .  28 

7.  Strength  and  Weakness  of  These  Orders  ...  29 

8.  Napoleon's  Methods  Not  Practicable  for  Smaller 

Men 30 

9.  Improvised  Administration 31 

CHAPTER  IV 
EXECUTIVE  SUPERVISION 

1.  Third  Function  in  Leadership 33 

2.  Conditions  Calling  for  Direct  Supervision       .      .  33 

3.  Limitations  in  Administrative  Supervision      .      .  34 

4.  Supervision  Involves  Different  Grades  of  Author- 

ity          35 

5.  First  Principles  of  Supervision       . .'    .      .      .      .35 

6.  The  Master's  Eye 36 

7.  Expectation  of  Surprises 37 

8.  Supervision  by  Inspection 38 

9.  Symptomatic  Details 39 

CHAPTER  V 
REWARDS  AND  PENALTIES 

1.  Fear  and  Interest 42 

2.  Ruling  by  Division 42 


TABLE  OF  CONTENTS  ix 

SECTION  PA<3B 

3.  Prizes  and  Distinctions 43 

4.  Associated  Interests 44 

5.  Moral  Basis  of  Discipline    . 44 

6.  Administrative  Responsibility 45 

7.  Expert  in  Labor  Selection 46 

8.  Industrial  Counselor 46 

9.  Attitude  Toward  Employes 48 

10.  Causes  of  the  Turnover ,.  49 

11.  Reduction  of  Labor  Turnover 50 

12.  Labor  a  Relationship 51 

13.  Wage   Relationship 52 

14.  Democracy  and  Industrial  Freedom     ....  53 


CHAPTER  VI 

PRINCIPLES  OF  BUSINESS  MANAGEMENT 

1.  Administration   at   Close  Range 55 

2.  Cardinal   Elements   of   Management    ....  55 

3.  Every   Principle   Implies   a  Force       ....  56 

4.  Nature   of   Business   Forces 56 

5.  Manager   Must   Direct   Forces 58 

6.  Human  Engineering 60 

7.  Basic  Principle  in  Management 62 

8.  Purpose  of  Management  Is  Profit      ....  63 

9.  Immediate  Versus  Future  Profits 64 


CHAPTER  VII 

WHAT  MANAGEMENT  INVOLVES 

1.  Difference  between  Manager  and  Engineer       .      .      67 

2.  Specialization  Complicates  Management   ...      68 

3.  Specialization  in  Management 69 


x         FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

4.  Department  Specialization 70 

5.  Cooperation  and  Specialization  Must  Always  Go 

Together 71 

6.  Scientific  Methods  of  Investigation      ....  72 

7.  Continual  Study  and  Progress 74 

8.  What  the  Science  of  Management  Involves      .      .  76 

9.  Effect  of  a  New  Standard 79 

10.     Furnishing  the  Men  with  a  Teacher    ....  80 

CHAPTER  VIII 
ORGANIZATION  OF  ADMINISTRATION 

1.  Few  Principles  but  Many  Methods       ....  82 

2.  Economic  Units .83 

3.  Industrial  Units 84 

4.  Distinctions    Between    Economics,    Industry    and 

Business 85 

5.  Managerial  or  Business  Units  .  t 86 

6.  Manager's  Cabinet 90 

7.  Progress  Due  to  Expert  Knowledge     ....  90 

8.  Analysis  of  Staff  and  Line  Organization  ...  92 

9.  Financial  Department  as  a  Unit 94 

10.  Sales  Department  as  a  Unit 94 

11.  Accounting  Department  as  a  Unit 95 

12.  Production  Department  as  a  Unit 96 

13.  Management    Units    the    Basis    of    Organization 

Charts 97 

14.  Duties  of  the  Management  Units 98 

CHAPTER  IX 

TYPES  OF  MANAGEMENT— THE  FACTORY 

1.  Thin  Line  of  Red  Tape 101 

2.  Need    of    Clear    Understanding    of   Organization 

Types 103 


TABLE  OF  CONTENTS  xi 

SECTION  PAG« 

3.  Several  Differences  Between  Types      ....    104; 

4.  Why  Type  Distinctions  Grew  Up      .      .      .      .105 

5.  Staff  and  Line  in  Business 106 

6.  Functional  Type,  the  Factory 107 

7.  Functional  Method  of  Organization      .      .      .      .108 

8.  Foremen   of   the   Planning  Department    and   the 

Shop 109 

9.  Unsystematized  Type  of  Management       .      .      .109 

10.  Majority  of  Industries  Unsystematized      .      .      .111 

11.  Systematized  Type  of  Management     .      .      .      .111 

12.  Cost  Records  Highly  Developed 112 

13.  Committee  System 113 

14.  Work  of  the  Committees 114 

15.  Special  Types,  Divisional  and  Departmental  .      .    114 

16.  Work  Planned  Ahead 117 

17.  Shape  the  Man  to  the  Organization       .       .       .      .117 

18.  The  Primitive  Type  for  Small  Firms  .      .      .      .118 

CHAPTER  X 

TYPES  OF  MANAGEMENT— THE  OFFICE 

1.  Function  of  the  Office 120 

2.  Elements  of  Management  Applied 122 

3.  Office  Head 124 

4.  Selecting  and  Handling  Employes 125 

5.  Establishing  Standards 127 

6.  Military  Type  of  Organization 129 

7.  Functional  Type 130 

8.  Semi-Functional  Organization 131 

9.  Committee  System 133 

10.  Suggestion  System 134 

11.  Arrangement  and  Lighting  of  Office     ....    134 

CHAPTER  XI 

MODERN  AIDS  IN  MANAGEMENT— PLANNING 
1.     Real  Management  Is  Concerned  with  Policies,  not 

Details  .    138 


xii  FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

2.  Adjusting  Authority  to  Responsibility      .      .      .138 

3.  Organization  Charts  a  Prime  Requisite      .      .      .    139 

4.  Charts  Clarify  Ideas 140 

5.  Organization  Records 142 

6.  Written  Records  a  Basis  for  Standards     .      .      .    143 

7.  Lack  of  Control  Causes  Confusion       ....    144 

8.  A  Typical  Example  of  Nonproductive  Labor  .      .    145 

9.  Planning  Is  Specialized  Management  ....    146 

10.  Planning  and  Overhead  Expense 146 

11.  Overhead  Actually  Reduced  per  Unit  .      .      .      .147 

12.  Evolution  of  the  Planning  Department       .       .       .148 

13.  Thoughtful  Plans  Make  Valuable  Records       .      .    149 

14.  Planning  Movements  and  Operations    ....    149 

15.  Proportion  of  Planners  to  Doers 150 


CHAPTER  XII 

PLANNING  PRODUCTION— THE  FACTORY 

1.  Planning  Department  of  a  Factory     ....  152 

2.  Coordinating  Duties  of  Production  Clerk  .      .      .  152 

3.  Setting  Sales-Delivery  Dates 153 

4.  Relative  Importance  of  Orders 154 

5.  Further  Duties  of  Production  Clerk     ....  154 

6.  Aids  That  Lighten  the  Production  Clerk's  Task  .  155 

7.  Qualifications  for  the  Head  of  This  Department  .  156 

8.  Route  Clerk 156 

9.  Method  of  Work  for  the  Route  Clerk  .       .      .      .157 

10.  Qualifications  of  Route  Clerk 158 

11.  Special-Material  (Foundry)  Clerk       .      .      .      .159 

12.  Duties  of  Foundry  Clerk 159 

13.  Balance-of-Stores  Clerk,  a  Unique  Feature     .       .    160 

14.  Major   and    Minor   Duties   of   Balance-of-Stores 

Clerk    .  .    161 


TABLE  OF  CONTENTS  xiii 

SECTION  PAGE 

15.  Time-Study  Clerk     . 163 

16.  Instruction-Card  Clerk 163 

17.  Route-File  Clerk 163 

18.  Order-of-Work  Clerk 164 

19.  The  Eye  of  the  Superintendent 165 

20.  The  Recording  Clerk .      .    166 

21.  The  Cost  Clerk -.166 

22.  How  Cost  Sheets  Are  Kept  Up  To  Date    .      .      .167 

23.  Duties  of  Cost  Clerk 168 

24.  Timekeeper 168 

25.  Planning  Introduces  No  New  Duties    ....    169 

26.  Other   Functions   Associated   with   Planning  De- 

partment    170 

CHAPTER  XIII 

PLANNING  THE  CLERICAL  WORK 

1.  Office  Systems  Often  Haphazard 172 

2.  Working  Toward  Functional  Control  in  the  Office  173 

3.  Planning  Department  for  the  Office      ....    174 

4.  New  Policies  Involve  New  Methods      ....    175 

5.  Function  I  —  Keeping  the  Organization  in  Order     176 

6.  Function  II  —  Development  of  Methods    .      .      .178 

7.  The  Office  Records 179 

8.  Function  III  —  Development  of  Standardization  .    181 

9.  Function  IV  —  Development  of  Betterment  Plans    183 

10.  Organization  of  the  Planning  Department       .      .    184 

11.  Personnel  of  the  Planning  Department       .      .      .    185 

CHAPTER  XIV 

STANDARDIZATION— MATERIALS  AND  EQUIPMENT 

1.     Correct   Standards   the   Basis   of   Administrative 

Judgment 188 


xiv  FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

2.  Management  a  Series  of  Measurements      .      .      .    188 

3.  New  Standards  Changed  Plane  of  Competition      .    189 

4.  Standards  of  Labor  Efficiency 190 

5.  Objections  to  Standardization 191 

6.  Cautions  in  Adopting  Business  Standards       .      .    191 

7.  Standard  Materials,  First  Step 192 

8.  Standard  Quantities,  Second  Step 193 

9.  Monetary  Savings  Due  to  Standard  Materials       .    194 

10.  Standard  Office  Material 194 

11.  Example  of  Standard  Drawings 195 

12.  Standard  Equipment .196 

13.  The  Principle  as  Applied  to  Delivery  Systems       .    197 

14.  Interchangeable  Parts *     .      .      .197 

15.  Importance  Emphasized  by  Whitmore,  1841    .      .    198 

16.  Use  of  "  Limiting  Dimensions." 199 


CHAPTER  XV 

STANDARDIZATION— SYMBOLS  AND  ROUTINE 

1.  Use  of  Symbols 201 

2.  Constructing  a  System  of  Symbols       ....  201 

3.  Symbols  an  Arbitrary  Measure 202 

4.  Advantages  of  Mnemonic  System    .      .      .      .      .  202 

5.  A  Working  System 203 

6.  Applications  of  the  System 204 

7.  Use  of  Numbers  in  Symbols 205 

8.  Symbols  for  Manufacturing 205 

9.  Improving  This  Method 206 

10.  Aims  of  Newer  Methods 207 

11.  Standard  Routine 207 

12.  Steps  in  Developing  Standard  Routine       .      .      .  208 

13.  Profiting  by  the  Experience  of  Others      .       .       .  209 

14.  Function  of  Technical  Societies  .  210 


TABLE  OF  CONTENTS  xv 

SECTION  PAG1 

15.  Value  of  Printed  Records 210 

16.  Advantages  of  Loose-Leaf  Manual      .       .       .       .211 


CHAPTER  XVI 

STANDARDIZATION  AND  LABOR 

1.  Goal  of  Every  Producer 213 

2.  Production  Limited  by  Hand  Labor     ....   213 

3.  Three  Factors  Conditioning  Output     .      .      .      .214 

4.  New  Standards  Must  Be  Developed  Continually  .   215 

5.  Standard  Time  as  Determined  by  Experience  .       .216 

6.  New   Conditions   Make   Time-Standard   Hard   to 

Obtain 217 

7.  Some  General  Considerations  in  Standard  Times  .    218 

8.  To  Attain  Standard  Times  in  a  Shop  .      .      .      .218 

9.  Standardize   Machines   Before  Getting  Standard 

Time 218 

10.  Records  Must  Be  Provided 219 

11.  Foremen  and  Laborers  Must  Be  Taught  .      .      .219 

12.  Standard  Times  in  Handling  and  Assembling  .       .    220 

13.  Elements  in  Handling  Time 220 

14.  Sample  of  Standard  Time  in  Handling      .      .      .221 

15.  Material-Handling  Time      .      .      .      .      .'      .      .222 

16.  Standard  Assembling  Time 223 

17.  Economy  Gained  by  a  Standard  Time  ....   224 


CHAPTER  XVII 

STANDARDIZATION  AND  RATE-FIXING 

1.  Chief  Elements  in  Efficiency 226 

2.  Standard  Time  Not  Always  Shortest  Time      .      .    226 


xvi      FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

3.  Standards  for  Wage  Systems 227 

4.  The  Moral  Responsibility  in  Rate-Fixing     .      .    227 

5.  Trade-Union  Opposition  to  Rate-Fixing   .       .      .    229 

6.  The  Employe  as  Rate-Fixer 230 

7.  The  Employer  as  Rate-Fixer 230 

8.  Rate-Fixing  as  a  Science 233 

9.  Rate-Fixing  as   an  Art 235 


CHAPTER  XVIII 

WAGE  SYSTEMS 

1.  Systems  of  Pay 239 

2.  The  Premium  or  Bonus  System 240 

3.  The  Halsey  System ;  240 

4.  Taylor  Differential  System 241 

5.  Efficiency  System 242 

6.  Comparison  of  Emerson  and  Taylor  Wage  Plans  243 

7.  Comparison  of  Three  Fundamental  Rates  .      .      .  244 

8.  The  Purpose   of  Time-  and  Motion-Studies   and 

Bonus  Systems 245 

9.  Simple  Bonus  Plan  Without  Time-Study      .      .  245 


CHAPTER  XIX 

CONTROL  OF  LABOR— SELECTION  AND  TRAINING 

1.  Selecting  the  "Right  Stripe" 247 

2.  Methods  Used  by  Chalmers  and  Taylor     .      .      .  247 

3.  Aid  Gained  from  a  Written  List 248 

4.  Make  a  Man  Analyze  Himself 249 

5.  Use  of  Written  and  Oral  Tests 251 

6.  Testing  for  Physical  and  Moral  Fitness    .      .      .  252 

7.  Control  by  Education 253 


TABLE  OF  CONTENTS  xvii 

SECTION  PAGE 

8.  Special  Training  for  the  Company's  Work     .      .  256 

9.  Manuals  as  an  Educational  Factor       ....  256 

10.  Special  Training  Schools  for  Employes     .      .      .  257 

11.  Education  for  the  Whole  Industry       ....  259 

12.  Work  of  the  National  Commercial  Gas  Association  260 


CHAPTER  XX 

CONTROL  OF  LABOR-WAGES,  RECORDS  AND  PROMOTIONS 

1.  High  Cost  of  Man-Power 265 

2.  Waste  of  Human  Power 266 

3.  Periods  of  Rest  and  Relaxation 268 

4.  A  Fair  Day's  Pay 269 

5.  Illustrations— Six  Cases      .      .      .      .      .      .      .270 

6.  Special  Factors  Influencing  Wages       ....  272 

7.  Wages  the  Chief  Incentive 274 

8.  Importance   of   Short-Period   Records       .       .       .  275 

9.  Pleasurable  Surroundings 276 

10.  Chilly  Surroundings  Develop  Fear       ....  277 

11.  Stimulating  Self-Interest 278 

12.  Checks  Against  Injustice 278 

13.  Elimination  of  the  Unfit 280 

14.  A  Typical  Case  of  the  Use  of  Records       ...  280 

15.  Permanency  of  Employment,  and  Pensions     .      .  281 

16.  Hope  of  Advancement  as  a  Stimulus    ....  282 

CHAPTER  XXI 

SOURCES  OF  ADMINISTRATIVE  INFORMATION- 
STATISTICS  AND  INSPECTION 

1.  Use  of  Statistics 285 

2.  Graphs  and  Statistics 285 

3.  Indicating  Relation  of  One  Set  of  Facts  to  Another  286 

4.  Comparisons  of  Time  Periods 287 

IV— 2 


xviii    FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

5.  Reports 289 

6.  Determining  Facts  by  Inspection 290 

7.  Inspection  of  Work  in  Process 291 

8.  Questions  as  Guides 292 

9.  Qualifications  of  Inspectors 293 

10.  Information  from  the  Outside 294 

11.  Various  Kinds  of  Inspection 294 


CHAPTER  XXII 

SAVINGS  IN  TIME— RESEARCH  AND  RECORDS 

1.  Inspection  and  Research 296 

2.  A  Large  Research  Laboratory 297 

3.  Commercial  Results 298 

4.  Time-Study 299 

5.  Time-Study  Reduced  to  Formula 301 

6.  Written  Aids,  Books,  etc 303 

7.  Periodicals 303 

8.  Government  Publications 304 

9.  Study  of  Competitive  Methods       ..'...  304 

10.  American  Readiness  to  Supply  Information    .      .  305 

11.  Consulting  Experts 306 


CHAPTER  XXIII 

SAVINGS    IN    TIME— ROUTING 

1.  Time-Saving  by  "Routing" 307 

2.  Essentials  in  Routing 308 

3.  Securing  a  Good  Plant  Layout 309 

4.  Straight  Line  between  Terminals 310 

5.  Various  Types  of  Manufacture 310 

6.  Analytic  Manufacture 311 


TABLE  OF  CONTENTS  xix 

SECTION  PAGE 

7.  Continuous  Manufacture 311 

8.  Assembling  Manufacture 311 

9.  Passageways  Must  Be  Provided 312 

10.  Transportation 312 

11.  Growth  Must  Be  Allowed  For 314 

12.  Expansion  Not  to  Interfere  with  Flow  of  Work  .  314 

13.  Taking  Advantage  of  Gravity 316 

14.  Time  Element  in  Routing 317 

15.  Two  Types  of  Routing 318 

CHAPTER  XXIV 

SAVINGS  IN  TIME-DISPATCHING—AUXILIARY 
APPLIANCES 

1.  When  Special  Dispatching  Is  Necessary  .      .      .  321 

2.  How  to  Plan  the  Routing 321 

3.  What  the  Route-Board  Is 323 

4.  Planning-Board  Signals  All  Movements    .       .       .  324 

5.  Questions  Answered  by  Route-Board    ....  324 

6.  Status  of  Work  in  Progress 325 

7.  How  to  Route  Office  Work 328 

8.  Time  Schedule  of  the  Clearing  House  ....  330 

9.  How  Organization  Saves  Time 331 

10.  Substitute  Power  Equipment 331 

11.  Equipment  Tickler 332 

12.  Other  Methods  to  Avoid  Shutdowns     .      .      .      .332 

CHAPTER  XXV 

SAVINGS  IN  MATERIAL— STOCK-KEEPING 

1.  Stock-Keeping  System  a  Necessity      ....  334 

2.  Tool  Room  in  Charge  of  Expert 334 

3.  Three  Rules  of  Storekeeping    .      .      .      .      .      .  335 

4.  Receiving  Supplies 336 


xx  FACTORY  AND  OFFICE  ADMINISTRATION 

SECTION  PAGE 

5.  Receipting  for  Goods 337 

6.  Issuing  Supplies 338 

7.  How  to  Use  Requisitions 338 

8.  Bill-of-Materials 338 

9.  Combination  Systems 340 

10.  Complete  and  Simple  System 340 

11.  Single  and  Double  Check  System 34-1 

12.  Responsibility  for  Remainder  on  Hand      .      .      .  342 

13.  Stock  Room  Protects  Goods 343 

14.  Classification  by  Kind 344 

15.  Size  Materials  When  Checking 345 

16.  Stock  Ledger  and  Inventory-Taking   ....  346 

17.  Losing  Time  on  Cheap  Rather  Than  on  Expensive 

Operations 348 

18.  Principles  of  General  Application 349 


FACTORY  AND  OFFICE 
ADMINISTRATION 

CHAPTER  I 

THE  ERA  OF  THE  ADMINISTRATOR 

1.  Growth  of  industrial  establishments. — Mr.  S.  F. 
Bowser  of  Indiana  started  life  hauling  ice,  conceived 
the  idea  of  the  self -measuring  pump  for  distributing 
oil  and  gasoline,  and  from  a,  room  in  a  cow-shed  de- 
veloped a  factory  occupying  twelve  acres  of  floor 
space.  His  first  machine  was  an  improvised  lathe 
operated  from  a  belt  driven  by  turning  a  wagon  wheel. 
Twice  his  business  has  been  completely  wiped  out  by 
fire,  but  he  has  lived  to  see  his  employes  number  1,600 
and  his  sales  amount  to  over  $4,000,000  a  year. 

We  have  in  this  illustration  American  business  life 
epitomized.  The  man,  the  growth  of  the  business 
and  the  complex  problems  which  must  have  been  in- 
volved, suggest  the  various  elements  which  enter  into 
the  administrative  activities  of  business  life. 

Industrial  enterprise  and  the  growth  of  business  are 
world  wide.  The  Willys-Overland  Company  of  To- 
ledo, Ohio,  has  so  increased  the  use  of  electricity  in  its 
manufacturing  processes  that  it  now  requires  as  much 


2       FACTORY  AND  OFFICE  ADMINISTRATION 

of  it  as  a  city  of  250,000  inhabitants  would  for  ordi- 
nary household  purposes.  The  Ford  Automobile 
Company  uses  a  million  cubic  feet  of  gas  a  day — 
enough  to  supply  a  city  of  100,000  people.  The  Cad- 
bury  Chocolate  Works  of  Birmingham,  England,  have 
grown  from  a  small  industrial  community  composed 
of  300  persons  in  1880,  to  the  present  urban  propor- 
tions of  nearly  7,000  employes.  The  Krupp  Works 
at  Essen,  Germany,  cover  an  area  of  1,000  acres  and 
employ  over  35,000  persons. 

2.  Private  and  public  administration. — In  the  use 
of  equipment,  power  and  material  and  in  the  number 
of  people  employed,  many  of  the  world's  industrial  es- 
tablishments assume  the  proportions  of  city  or  state 
governments.  From  the  viewpoint  of  size  and  the 
number  of  workers,  the  management  of  many  modern 
factories  involves  administrative  questions  which  a 
few  years  ago  would  have  seemed  applicable  only  to 
military  or  civil  organization.  Administration  in- 
volves the  velocity  and  the  continuity  of  movements 
as  well  as  their  magnitude.  When  we  take  into  con- 
sideration the  intensity  of  activity  in  the  different 
fields,  the  administrative  problems  which  confront  our 
municipal,  state  and  military  organizations  pale  beside 
those  of  industrial  plants. 

A  department  store  turns  over  millions  in  stock 
every  three  months.  An  automobile  factory  makes 
a  machine  every  sixty  seconds.  A  printing  press 
folds  1,500  papers  a  minute,  year  in,  year  out. 
Again,  the  success  of  business  administration  must  be 


THE  ERA  OF  THE  ADMINISTRATOR  3 

judged  by  the  standard,  Does  it  pay  in  dollars  and 
cents?  Periods  of  accountability  are  sure  and  fre- 
quent. In  this  respect  there  is  but  slight  similarity 
between  the  administration  of  an  industrial  unit  which 
must  draw  its  strength  from  within,  and  that  of  a 
civic  or  military  unit  which  draws  its  resources  from 
the  pockets  of  an  outside  community  or  from  the  pil- 
laged fields  of  the  adversary.  The  mayor  of  a  city 
appeals  to  his  constituents  once  in  one  or  two  or  more 
years;  the  military  leader  may  never  be  brought  to 
account  for  his  methods ;  but  a  business  administrator 
must  account  regularly  for  the  profits  of  his  concern. 

Public  and  private  administration  deal  with  simi- 
lar problems,  and  are  guided  by  kindred  principles  of 
organization  and  operation,  but  the  spur  of  compe- 
tition and  the  desire  for  profit  develop  a  far  higher 
efficiency  in  the  private  field. 

3.  Need  of  sound  business  methods  not  always 
realized. — The  industrial  unit  should  be  adminis- 
tered by  a  policy  which  is  constructive,  definite  and 
responsible.  It  is  reported  that  one  large  automobile 
concern  decided  to  distribute  $10,000,000  surplus 
after  one  night's  reflection  on  the  part  of  the  chief 
executive.  The  story  is  typical  of  the  rapidity  with 
which  decisions  are  reached  by  men  trained  thru  expe- 
rience in  the  difficult  task  of  administration.  Such 
men  sometimes  believe  that  money  can  be  made  solely 
by  energy  and  determination.  They  are  not  given  to 
analysis  and  fail  to  realize  how  their  own  powers  have 
grown  as  a  result  of  the  self-training  they  have  given 


4       FACTORY  AND  OFFICE  ADMINISTRATION 

themselves,  and  are  therefore  indifferent  to  plans  for 
scientific  methods  of  administration.  In.  the  United 
States,  business  men  have  grown  up  in  a  young  and 
loose  industrial  organization.  There  have  been  few 
great  interests  which  could  not  be  temporized  with. 
There  has  always  been  a  large  margin  of  profit,  and 
problems  of  external  or  internal  policy  or  old  abuses 
were  seldom  so  pressing  that  it  was  not  easier  to  take 
chances  than  to  take  pains. 

4.  Weight  of  personality. — When  ignorance  incurs 
few  penalties,  managers  are  prone  to  arrogate  to 
themselves  great  wisdom.     Too  often  the  assumption 
of  superior  knowledge  has  stood  in  the  way  of  prog- 
ress in  the  study  of  business  problems.     Self-made 
men  delight  to  discourse  on  personality,  but  seldom 
do  they  give  the  world  the  constructive  ideas  upon 
which  real  improvement  of  business  administration 
depends.     Thru  the   mere   glorification   of   success, 
much  of  our  business   philosophy   is   made   up   of 
pernicious  dogmatism.     With  it  is  sometimes  found 
abstract  speculation  on  practical  business  problems, 
since  it  is  much  easier  to  imagine  an  ideal  business 
situation  than  to  know  the  tendencies  of  actual  con- 
ditions. 

5.  Weight  of  economic  forces. — In  the  science  of 
business   administration  the  tendencies   which  have 
been  noted  have  led  to  a  confusion  of  issues,  for  in  a 
science  phrases  and  platitudes  cannot  be  substituted 
for  patient  investigation  and  the  analysis  of  facts. 
Civil  and  military  necessities  have  compelled  the  state 


THE  ERA  OF  THE  ADMINISTRATOR  5 

and  army  authorities  to  study  and  classify  their  activi- 
ties and  experiences,  and  now  economic  pressure  is 
forcing  business  executives  to  assume  a  similar  atti- 
tude toward  the  administration  of  industry. 

The  whole  tendency  of  economic  development  is  to 
destroy  the  isolation  of  former  periods.  Men  in  the 
conduct  of  business  are  compassed  about  by  general 
economic  forces  which  they  must  dominate  or  to  which 
they  must  adapt  themselves.  Whatever  takes  place 
in  any  part  of  the  world  has  its  echo,  faint  or  pene- 
trating, as  the  case  may  be,  in  the  economic  life  of  our 
nation.  In  the  world-wide  competition  of  modern 
times,  mere  money  and  dumb  luck  cannot  be  relied 
upon  to  give  a  man  a  place  and  keep  him  in  it.  Suc- 
cessful enterprise  requires  careful  planning.  Men 
may  prepare  for  a  business  venture  consciously  or 
unconsciously,  but  there  must  be  adequate  prepara- 
tion. More  and  more  are  men  becoming  aware  of 
this  need ;  more  and  more  are  they  planning  their  busi- 
ness operations  as  an  engineer  plans  his  work. 

6.  Opportunities  of  the  present. — The  nineteenth 
century  was  the  golden  age  of  machinery  and  this 
age  has  not  yet  seen  its  close.  Innumerable  inven- 
tions found  a  field  open  for  widespread  utilization, 
and  called  for  vast  financial  combinations.  Thomas 
Edison's  life  work  displays  the  possibilities  in  regard 
to  the  invention  of  new  industrial  equipment;  the 
accomplishments  of  J.  J.  Hill  and  Andrew  Carnegie 
show  the  possibilities  of  creation  in  commercial  or- 
ganization, and  J.  Pierpont  Morgan's  work  epitomizes 


6        FACTORY  AND  OFFICE  ADMINISTRATION 

constructive  labor  in  the  field  of  financial  organization 
— all  symbols  of  successful  inventive  effort. 

Invention — the  capacity  to  see  new  combinations — 
lies  behind  all  human  progress.  In  the  past  century 
invention  was  chiefly  concerned  with  the  advancement 
of  the  arts  connected  with  machines,  materials  and 
money,  but  there  is  prospect  of  further  industrial 
progress  if  inventive  power  is  applied  at  a  new  point. 
In  the  industrial  trinity  of  machines,  money  and  men, 
men  seem  to  have  been  neglected.  The  machine  age 
with  division  of  labor,  has  prepared  the  way  for  an 
administrative  age  where  men  and  their  cooperation 
will  count  most  in  advancing  civilization.  It  is  not 
unlikely  that  the  men  with  inventive  power,  who  will 
be  rewarded  most  highly  by  society  in  the  future,  will 
be  the  business  executives — the  men  who  devote  their 
creative  and  constructive  energies  to  the  problems  of 
business  and  industrial  organization  and  administra- 
tion. 

7.  Importance  of  knowing  the  social  trend. — 
The  economic  development  of  the  last  hundred  years 
can  be  considered  as  the  necessary  preparation  for  a 
future  in  which  administrative  principles  will  play  a 
larger  part.  This  trend  must  be  reckoned  with. 
The  young  man  who  today  prepares  himself  to 
become  an  expert  watchmaker  would  find  himself  out 
of  place  in  a  land  of  dollar  timepieces;  and  an  of- 
fice apprentice  would  be  foolish  to  devote  his  life  to 
rapid  mental  calculations  in  the  day  of  the  adding 
machine.  Dazzled  by  the  successes  of  men  who  led  in 


THE  ERA  OF  THE  ADMINISTRATOR  7 

the  industrial  development  of  their  day,  many  pres- 
ent-day youths,  notwithstanding  seek  to  emulate  them 
by  following  the  same  course. 

Past  progress  has  been  rightly  attributed  to  "divi- 
sion of  labor,"  but  this  principle,  which  solved  so  many 
problems  in  the  past,  seems  to  have  lost  some  of  its 
power  under  present  conditions.  It  has  not  in  fact 
lost  force,  but  men  have  taken  too  narrow  a  view  of 
specialization.  The  possibilities  of  the  division  of  la- 
bor are  far  from  exhausted.  Specialization  has  en- 
tered the  realm  of  administration,  and  the  chances  of 
success  for  men  who  see  opportunities  and  possess  the 
power  of  invention,  i.  e.,  the  power  of  inventing  ad- 
ministrative methods  instead  of  devising  new  ma- 
chines, have  not  become  less  numerous,  tho  they  are 
found  in  a  different  and  perhaps  a  higher  field  of  busi- 
ness effort. 

8.  Specialization  develops  organizing  ability. — The 
most  recent  development  in  the  division  of  labor  is 
the  setting  free  of  the  organizing  ability  of  man- 
kind. When  the  workingman  devoted  his  entire 
energy  to  making  a  living,  he  had  little  time  for  plan- 
ning better  ways  of  doing  his  work.  A  century  of 
specialized  labor,  however,  has  given  great  numbers 
of  men  an  opportunity  to  perfect  new  machines  and 
combinations  of  processes  which  have  greatly  enriched 
society.  To  these  men  society  has  been  willing  to 
pay  the  price  which  all  constructive  ability  can  de- 
mand. Men  who  found  better  ways  than  their 
fathers  ever  dreamed  of  for  producing,  exchanging 


8       FACTORY  AND  OFFICE  ADMINISTRATION 

and  distributing  commodities,  have  been  richly  re- 
warded. To  this  class  belong  the  Vanderbilts,  the 
Rockefellers,  the  Rothschilds,  the  Krupps  and  others 
like  them. 

9.  Need  for  leadership. — As  industrial  and  com- 
mercial enterprises  expand,  the  demand  for  able  lead- 
ership becomes  more  and  more  insistent.     It  is  not 
only  among  the  highest  officials  of  the  modern  corpora- 
tion that  executive  ability  of  a  high  order  is  required. 
There  are  many  positions  of  lesser  rank  where  men 
are  charged  with  the  handling  of  property  and  the 
control  of  men,  on  a  scale  which  far  exceeds  that  of 
the  independent  enterprises  of  earlier   days.     The 
large  rewards  in  industry  and  commerce  appear  to  be 
reserved  for  the  executives  who,  in  addition  to  the 
mechanical  appliances  which  human  ingenuity  is  con- 
stantly devising,  bring  to  their  task  the  ability  to  or- 
ganize and  to  administer  vast  masses  of  capital  and 
great  numbers  of  laborers. 

10.  What  is  administration? — We  have  used  the 
term  administration  as  one  which  implies  some  degree 
of  excellence  and  merit,  and  thruout  this  work  shall 
continue  to  do  so.     Strictly  speaking,  the  term  is  neu- 
tral; it  means  nothing  more  than  the  conduct  or 
management  of  affairs.     Whether  guided  by  reck- 
lessness and  ignorance,  or  by  caution  and  wisdom,  it 
is  none  the  less  administration.     Since  business  is  con- 
ducted for  profit,  and  since  bad  administration  cannot 
last,  it  is  natural  that  the  term  business  administration 
should  carry  the  implication  that  it  is  backed  by  execu- 


THE  ERA  OF  THE  ADMINISTRATOR  9 

tive  ability.  It  is  therefore  to  be  expected  that  our 
consideration  of  business  administration  should  con- 
cern itself  with  the  study  of  the  successful  conduct  of 
business  affairs. 

We  are  concerned,  therefore,  with  business  that  is 
guided  by  executive  ability.  No  phrase  is  more  com- 
monly used  and  none  more  successfully  eludes  precise 
definition  than  the  rare  gift  of  executive  ability.  It  is 
a  compound  of  many  things.  Executive  ability  has 
sometimes  been  described  as  "letting  others  do  the 
work."  It  would  be  more  exact  to  say  that  such  abil- 
ity consists  in  doing  nothing  which  others  can  do,  and 
in  selecting  others  who  can  do  well  the  work  in- 
trusted to  them.  One  might  perhaps  add  that  prog- 
ress in  executive  authority  consists  in  a  nice  discrimi- 
nation as  to  what  may  safely  be  deputed  to  others,  and 
what  must  be  reserved  for  the  leader. 

11.  Test  of  the  administrative  function. — The  work 
of  the  executive  often  differs  from  that  of  his  sub- 
ordinates, less  in  the  kind  than  in  the  degree  of  re- 
sponsibility which  is  involved.  The  stenographer 
knows  what  limits  are  placed  upon  his  activities;  the 
man  at  the  lathe  is  seldom  troubled  as  to  what  consti- 
tutes his  task.  From  the  routine  operations  of  the 
humblest  workers  to  the  activities  of  the  directors  of  an 
enterprise,  the  duties  of  each  position  as  it  rises  in  the 
scale  of  responsibility  seem  to  lose  some  degree  of 
defmiteness.  This  appears  perfectly  natural  when  we 
examine  the  nature  of  responsibility  in  business. 

Company  officials  are  fond  of  pointing  out  to  their 


10     FACTORY  AND  OFFICE  ADMINISTRATION 

subordinates  the  dire  consequences  which  follow  cleri- 
cal errors.  Mr.  Smith  of  Wherenot,  California, 
sends  in  his  check  for  $146.92  in  full  payment  for 
goods  ordered  from  the  New  York  Suit  Company. 
The  cash  clerk  who  enters  the  order  carelessly  omits 
to  write  the  figure  1  in  the  amount,  making  it  $46.92. 
The  order  goes  thru,  but  the  credit  department  orders 
the  goods  shipped  C.O.D.,  balance  $100. 

Now  Mr.  Smith  lives  miles  from  the  nearest  rail- 
road station — a  three  days'  journey  by  wagon.  The 
agent,  in  his  notification  of  the  arrival  of  the  goods, 
supposing  that  Mr.  Smith  knows  that  $100  is  due, 
makes  no  mention  of  the  fact.  When  Smith  comes 
to  the  station  for  the  goods,  the  agent  refuses  to 
deliver  them,  in  spite  of  Smith's  protest  that  the 
money  has  been  paid  in  full  in  advance.  Smith  has 
to  drive  back — another  three  days'  journey — and  be- 
gin a  painful  correspondence  with  the  New  York 
firm.  Of  course,  the  cash  clerk's  mistake  is  found 
out  and  the  railway  agent  is  instructed  to  release  the 
goods,  but  Smith  must  make  another  round  trip  of 
180  miles.  To  square  itself  with  Smith,  the  New 
York  Suit  Company  pays  Smith's  expense  bill  of 
$40  and  presents  him  with  a  handsome  watch  besides, 
but  it  loses  a  customer. 

The  clerk  has  injured  the  standing  of  the  house 
with  the  customer  by  a  purely  mechanical  act  which  is 
definitely  measurable  in  its  results,  i.  e.,  leaving  off  the 
figure  1,  and  the  consequent  error  of  $100  in  the  ac- 
count loses  a  customer.  The  management  hopes  to 


THE  ERA  OF  THE  ADMINISTRATOR         11 

renew  business  relations  with  the  customer  and  adopts 
measures  to  effect  this.  Here  then  rests  the  distinc- 
tion between  the  functions  of  the  clerk  and  those  of  the 
manager.  The  clerk  has  a  definitely  limited  scope  of 
activities ;  the  manager  deals  with  relationships  which 
require  the  use  of  judgment.  The  broader  the  influ- 
ence of  the  executive,  the  greater  is  his  responsi- 
bility, and  the  higher  is  his  position.  The  manager  of 
the  New  York  Suit  Company  handles  Mr.  Smith's 
case  because  of  the  responsibility  involved — nothing 
less  than  the  reputation  of  the  house  is  at  stake. 

The  difference  between  the  position  of  the  clerk  and 
that  of  the  superior  officer  does  not  lie  in  the  fact  that 
one  attends  to  details  while  the  other  deals  with  gen- 
eral policies ;  the  difference  lies  in  the  kind  of  details 
each  handles.  The  duties  of  the  cash  clerk  are  those 
of  routine,  repetitive  in  nature  and  involving  slight  re- 
sponsibility. The  manager's  duties  also  involve  de- 
tails, but  these  are  symptomatic  details,  the  handling 
of  which  involves  heavy  responsibilities.  The  clerk's 
error  in  detail  caused  the  firm  the  loss  of  a  few  dollars 
and  one  customer.  The  manager's  handling  of  that 
error  was  no  less  a  detail,  but  the  effects  of  a  mis- 
take on  his  part  would  have  been  immensely  greater. 
In  the  one  case,  the  effects  of  the  detail  are  lost  within 
the  department,  the  office  or  the  firm  itself;  in  the 
other,  the  effects  lie  beyond  the  office  or  the  factory 
and  involve  the  good- will  and  policies  of  the  company. 

12.  Thought,  the  basis  of  administration j — The  Na- 
tional Cash  Register  Company  has  posted  thruout  its 


12     FACTORY  AND  OFFICE  ADMINISTRATION 

plant  the  notice,  Think.  To  many  executives,  dis- 
couraged by  repeated  efforts  to  awaken  initiative  in 
their  employes,  such  a  sign  seems  as  appropriate  as  a 
display  of  Edison  service  in  an  institution  for  the 
blind.  But  telling  men  to  think  and  getting  no  re- 
sponse is  after  all  no  test  of  men's  ability  to  think. 
If  there  were  not  depths  of  reserve  power  in  every 
man  of  which  he  is  seldom  conscious,  it  would  be  use- 
less to  discuss  the  essentials  of  administration.  Why 
urge  men  to  think  if  each  is  already  working  at  the 
upper  limit  of  his  thinking  power?  Planning,  giv- 
ing orders  and  supervising  belong  to  the  higher  planes 
of  thinking  and  constitute  administration.  Planning, 
giving  orders  and  supervising  call  for  outlays  of 
energy  on  the  part  of  the  administrator,  of  which  the 
follower  of  routine  has  not  the  slightest  conception. 
That  is  why  the  office  and  shop  men  never  tire  of 
gossiping  about  the  boss  and  wondering,  How  does  he 
hold  down  his  job?  or,  What  does  he  do  to  earn  his 
salary? 

Eight  hours,  a  spot  in  the  office  or  factory,  a  task — 
these  constitute  a  "job"  to  most  men.  The  energy 
required  to  do  the  jobs  is  unimportant.  The  men 
who  do  them  soon  forget  that  they  have  brains. 
They  cease  to  want  a  position  which  calls  for  adminis- 
trative qualities.  Yet  because  thousands  of  others 
have  deep  layers  of  energy  and  reserve  powers  for 
reasoning,  it  is  worth  while  to  point  out  the  essentials 
of  administration — the  goal  toward  which  every  think- 
ing business  man  has  a  right  to  work,  a  field  that  is 


THE  ERA  OF  THE  ADMINISTRATOR         13 

always  open  to  those  men  who,  tapping  the  hidden 
sources  of  their  energies,  are  ever  ready  to  mature 
plans,  give  orders  with  judgment  and  supervise  effi- 
ciently the  affairs  of  a  big  business. 

REVIEW 

What  business  influences  have  compelled  the  adoption  of  new 
policies  of  administration? 

Compare  the  standards  used  in  judging  the  results  of  civil  and 
military  methods  of  administration  with  those  of  purely  business 
enterprises. 

Why  are  business  methods  based  on  personality  giving  way  to 
methods  founded  on  constructive  ideas  and  scientific  research? 

What  great  responsibility  is  society  placing  upon  the  business 
man  of  today?  What  will  be  his  reward? 

Show  that  the  distinction  between  the  work  of  a  clerk  and  the 
work  of  a  manager  is  not  described  by  the  word  "detail." 

IV — 3 


CHAPTER  II 

PLANNING 

1.  Administration  in  peace  and  war. — Tho  one  ad- 
ministrator may  be  concerned  with  the  conduct  of 
some  vast  industrial  enterprise,  another  may  direct  the 
operations  of  a  city  or  state,  while  a  third  may  be  in- 
trusted with  military  operations  vital  to  the  life  or 
prosperity  of  his  country;  these  tasks  are  essentially 
similar.  To  seek  maxims  for  the  conduct  of  business 
from  the  exploits  and  methods  of  great  military  com- 
manders might  seem  at  first  blush  incongruous.  If 
we  refer  to  military  information  for  the  principles  un- 
derlying administration  in  general,  it  is  because  all 
administration  is  akin  and  because  the  records  of  war 
are  far  more  complete  than  those  of  peace.  In 
recounting  the  story  of  national  strife  no  detail 
escapes  attention.  No  phase  of  human  activity  is 
so  well  known  down  to  the  last  order  and  report  as 
the  manner  in  which  the  great  struggles  of  history 
have  been  carried  on.  Around  them  cluster  a  vast 
mass  of  official  record  and  personal  reminiscence,  from 
which  the  student  of  a  later  day  can  vividly  recon- 
struct the  events  of  the  past. 

Perhaps  the  most  picturesque  figure  of  military  his- 
tory is  Napoleon,  and  we  shall  draw  largely  upon  his 
methods  and  experience  to  illustrate  the  general  prin- 

14 


PLANNING  15 

ciples  of  administration.  In  war  the  first  element  of 
success  is  a  well-concerted  plan  of  action,  and  that 
this  is  fundamental  for  business  administration  is  ob- 
vious. 

2.  Napoleon's  success  due  to  administrative  plan- 
ning.— "The  Emperor,"  says  a  biographer  of  Napo- 
leon, "spent  his  life  in  his  study.  .  .  .  One  may  say 
that  all  the  other  circumstances  of  his  life  were  merely 
digressions."     This  is  putting  it  strongly  to  those 
who  think  only  of  the  Man  on  Horseback,  but  herein 
undoubtedly  lay  the  secret  of  Napoleon's  success  as  a 
military  administrator.     To  his  military  and  civil  ad- 
ministration his  study  was  what  the  planning  depart- 
ment of  the  General  Electric  Company  at  Schenec- 
tady  is  to  the  managers  of  that  corporation. 

Planning  preceded  everything  in  the  work  of  Na- 
poleon. In  the  midst  of  his  campagn  or  in  directing 
the  destinies  of  France  from  his  palace  of  the  Tuil- 
eries  we  find  him  planning.  While  allies  and  ene- 
mies slept  at  midnight,  the  Emperor  was  found  bend- 
ing over  his  maps  "illuminated  by  twenty  candles," 
meditating,  deciding,  dictating  orders. 

3.  Napoleon,  planner  as  well  as  dictator. — Na- 
poleon did  not  observe  the  conventional  methods  of 
his  day,  nor  was  his  brilliant  success  merely  the  result 
of  the  inspiration  of  genius  without  careful  fore- 
thought.    Those  who  admire  his  brilliancy,  those  who 
counsel  others  to  ride  rough-shod,  like  him,  to  their 
goal,  think  of  him  as  the  great  commander,  the  dic- 
tator.    They  too  often  forget  that  planning  was  one 


16     FACTORY  AND  OFFICE  ADMINISTRATION 

of  the  factors  responsible  for  Napoleon's  success. 
Many  persons  in  administrative  positions  believe 
themselves  to  be  real  leaders,  when  they  are  only  dic- 
tators, leaving  it  to  others  to  originate  measures  while 
they  merely  criticize. 

Modern  administrators  often  seek  to  prove  by  citing 
Napoleon's  example,  that  great  administrators  have  a 
genius  for  details.  This  false  conclusion  rests  upon 
the  failure  to  distinguish  between  what  Napoleon 
was  compelled  to  do,  and  what  he  would  have  done 
had  he  been  surrounded  by  men  to  whom  he  could 
intrust  the  execution  of  details.  The  genius  of  a 
leader  lies  in  his  ability  to  distinguish  between  the  de- 
tails which  as  manager  he  must  handle  himself,  and 
those  of  the  routine  class  which  belong  to  operation 
and  not  to  administration.  The  importance  of  details 
is  not  measured  by  the  size  of  the  units  which  are  in- 
volved. 

4.  Planning  adjusts  details  to  principles. — To  plan 
is  to  separate  the  essential  from  the  non-essential,  but 
to  make  this  separation  the  administrator  must  have  a 
few  indestructible  principles  which  act  as  crucibles  for 
dissolving  details.  Napoleon's  fundamental  rule  was 
simple.  "The  most  difficult  thing,"  he  said,  "is  to 
discover  the  enemy's  plans,  and  to  detect  the  truth  in 
all  the  reports  one  receives;  the  rest  requires  only 
common  sense." 

When  he  had  analyzed  all  details  and  decided  upon 
a  line  of  action,  the  execution  of  his  plans  was  as  sim- 
ple in  outline  as  his  method  of  planning.  First,  he 


PLANNING  17 

stated,  "I  converged  all  my  forces  on  the  point  I 
wished  to  force";  secondly,  it  was  his  principle,  "to 
begin  the  fight  and  get  in  as  many  blows  as  possible — 
the  offensive  in  dead  earnest  along  the  whole  line," 
and  finally  his  rule  provided  that  "at  the  weak  point 
and  at  the  moment  chosen  by  him,  the  General-in- 
chief  should  give  the  formidable  and  decisive  blow 
which  overthrows  his  adversary." 

5.  Collaboration  in  planning. — The  strength  of 
Napoleon  lay  in  his  planning;  his  weakness,  in  the 
effort  to  do  his  planning  without  aid.  The  German 
General  Staff  has  learned  to  overcome  this  weakness 
in  war.  American  business  men  are  learning  to  over- 
come it  in  industry  and  commerce. 

In  administrative  planning  collaboration  is  as  new 
as  are  controlling  accounts  in  bookkeeping.  In  both 
cases  the  necessity  of  keeping  check  on  numberless 
details  at  long  range  has  raised  the  newer  methods 
almost  to  a  par  with  the  principles  of  planning  and 
of  bookkeeping.  War,  politics  and  business  have 
undergone  great  changes,  and  conditions  of  adminis- 
tration have  been  much  altered. 

The  conditions  which  confronted  Napoleon  in  his 
administrative  labors  precluded  collaboration.  They 
called  for  a  centralized  control.  In  recognizing  this 
he  planned  the  maneuver  which  won  the  day  at  Jena 
and  Austerlitz — only  by  one  mind  could  such  master- 
pieces of  achievement  be  planned  and  carried  to 
fruition. 

Centralized  control  and  personal  leadership  were 


18     FACTORY  AND  OFFICE  ADMINISTRATION 

the  principles  of  scientific  management  which  Napo- 
leon introduced  into  the  administration  of  his  day. 
His  adversaries  followed  traditional  methods,  and 
their  controversy  in  the  councils  of  war  killed  origin- 
ality of  thought,  retarded  decisions,  led  to  comprom- 
ises, postponed  solutions,  and  deferred  the  grasping  of 
opportunities  until  it  was  too  late  to  use  them.  Busi- 
ness men  who  are  disposed  to  jump  at  such  new  ideas 
as  committee  systems  of  management  and  the  like, 
but  who  have  neither  a  planning  system,  nor  an  en- 
vironment in  which  such  ideas  will  bring  forth  fruit, 
would  do  well  to  study  the  "committee  system'*  in 
war,  as  applied  in  the  councils  of  Napoleon's  adver- 
saries. 

The  life  and  methods  of  Napoleon  show  the  heights 
to  which  centralized  control  and  personal  authority 
may  go,  but  they  also  mark  their  limitations. 

6.  Lesson  of  these  analogies. — Only  so  far  as  these 
illustrations  are  paralleled  in  business  affairs  are 
they  of  importance  here.  In  1800,  big  business  meant 
an  investment  of  a  few  hundred  thousand  dollars,  at 
the  most,  and  the  employment  perhaps  of  a  few  hun- 
dred workers.  Such  conditions  might  well  call  for 
a  centralized  administration,  or  as  Napoleon  put  it, 
"being  personally  present  during  the  whole  day  in 
that  corner  of  the  battlefield  where  it  is  presumed 
that  the  decisive  blow  will  be  given."  But  today's 
business  enterprises  compete  on  battle  lines  which 
reach  around  the  world.  An  American  department 


PLANNING  19 

store  may  operate  carpet  mills  in  Persia,  lace  works 
in  Brussels,  and  sell  by  mail  order  in  Russia  and  Aus- 
tralia. Modern  corporations  operate  under  one  con- 
trol, mines,  railways,  steamship  lines,  stores  and  fac- 
tories spread  over  a  continent.  No  one  man,  without 
collaboration,  could  control  such  vast  enterprises. 
The  staff  of  experts  has  become  as  necessary  in  busi- 
ness as  in  military  administration. 

Machiavelli  said  that  only  one  should  command  in 
war;  that  several  minds  weaken  an  army,  but  this 
maxim  is  of  doubtful  application  to  the  huge  enter- 
prises of  today  in  war  or  business.  Millions  of  men 
are  engaged  in  warfare.  In  commerce  even  so  simple 
a  matter  as  selling  groceries  is  often  conducted  in 
chain  stores  extending  across  a  continent.  These  con- 
ditions have  brought  about  a  new  leadership  in  which 
the  decisions  and  orders  of  the  leaders  are  the  result  of 
conferences  among  a  number  of  experts.  This  was 
exemplified  in  the  great  organization  guided  by 
Moltke  in  the  Franco-Prussian  War  and  has  received 
illustration  in  a  different  field  in  the  conduct,  since 
1900,  of  the  German  chemical  industry. 

7.  Newer  methods  make  slow  progress. — That  any 
form  of  collaboration  in  determining  policies  and  di- 
recting the  activities  of  a  business  has  advantages  is 
an  idea  which  makes  slow  progress  toward  recogni- 
tion. Labor  leaders  and  many  conservative  execu- 
tives look  askance  at  any  such  plan.  They  are  at  a 
loss  to  understand  how  business  can  succeed  without  a 


20     FACTORY  AND  OFFICE  ADMINISTRATION 

dominating  personal  leader  in  whom  the  members  of 
the  organization  implicitly  relied,  and  whom  they 
would  follow  with  zeal  and  enthusiasm. 

Newer  methods  appear  to  lack  force.  The  substi- 
tution of  an  executive  committee  for  a  personal  leader 
has  often  weakened  the  energies  of  office,  shop  or  sell- 
ing forces.  While  it  would  be  idle  to  minimize  what 
the  personality  of  the  leader  has  accomplished,  there 
are  requirements  of  modern  administration  which  per- 
sonal leadership  alone  cannot  fill. 

In  passing  to  newer  methods  it  is  highly  desirable 
that  a  concern  make  the  transition  in  such  a  way  that, 
while  the  collaboration  principle  involved  in  the  staff 
conference  is  adopted,  the  advantages  which  come 
from  the  personal  work  of  the  leader  be  not  lost.  The 
expert  staff  depends  for  its  efficiency  on  the  applica- 
tion of  the  principle  of  division  of  labor,  on  the  de- 
velopment of  initiative  and  on  a  wide  diffusion  of 
knowledge  and  democracy  among  all  employes.  The 
personal  leader  relies  upon  concentrated  power,  un- 
ceasing activity  and  the  ability  to  awaken  and  sustain 
feelings  of  loyalty,  duty  and  self-sacrifice  among  his 
men. 

In  adopting  the  staff  conference  in  administrative 
matters,  there  is  danger  that  composite  opinion  may 
be  uncertain  and  decisions  flabby.  In  such  a  case  the 
attempt  to  retain  the  advantage  of  personal  direction 
by  issuing  the  staff  orders  in  the  name  of  the  general 
manager  usually  fails.  The  manager  loses  enthusi- 
asm when  he  thus  fathers  orders  which  are  not  his 


PLANNING  21 

own.  Employes  are  quick  to  note  any  lack  of  interest 
on  the  part  of  the  manager  and  to  reflect  the  same 
spirit  in  their  work. 

8.  Pressure  of  general  economic  problems. — There 
is  a  vital  weakness  in  the  administrative  organization 
of  our  business  concerns.  Efforts  to  develop  har- 
monious cooperation  between  the  men  who  plan  and 
command,  and  the  men  who  take  orders  and  operate 
the  business  machinery,  are  often  unsuccessful.  Even 
a  leader  of  the  highest  rank  finds  it  difficult  to  sustain 
year  in  and  year  out  the  high  ideals  of  duty,  loyalty 
and  sacrifice  necessary  to  the  most  efficient  operation 
of  a  modern  business  organization.  Nor  can  staff  or- 
ganization, or  functional  management  as  it  is  called 
when  the  same  principles  are  applied  to  factory  and 
office  operation,  accomplish  these  results  among  a 
great  body  of  workmen,  when  their  energies  are  ex- 
hausted by  monotonous  work,  and  their  loyalty  is 
weakened  by  appeals  of  trade-unions  whose  aims  are 
not  in  harmony  with  company  policies. 

Perhaps  the  greatest  problems  of  business  adminis- 
tration are  not  those  of  internal  organization,  but 
those  which  spring  from  general  economic  and  social 
conditions.  While  these  problems  remain  unsolved, 
an  element  of  mere  expediency  exists  in  all  efforts  to 
secure  cooperation  within  the  organization.  Bonus 
systems,  profit-sharing  schemes  and  copartnership 
plans  are  some  of  the  evidences  of  the  external 
pressure.  Too  often  they  are  adopted  without  proper 
consideration  of  their  relation  to  the  general  economic 


22     FACTORY  AND  OFFICE  ADMINISTRATION 

problems.  A  manager  may  find  his  organization 
working  inefficiently,  and  to  meet  his  own  pressing 
internal  needs  may  adopt  some  such  scheme  in  an 
imperfected  state,  often  taking  it  bodily  from  some 
other  concern,  which  has  taken  it  up  with  as  slight  de- 
liberation as  himself.  From  such  action  we  get  piece- 
rate  wage  systems  which  are  ineffective,  welfare  pro- 
grams which  degenerate  into  fox-trot  parties,  and 
pension  systems  which  put  a  premium  on  senility, 
simply  because  there  has  been  no  adequate  planning 
and  no  proper  adjustment  of  the  means  adopted  to 
the  end  proposed. 

The  problems  of  administrative  planning  are  of 
three  general  classes.  One  chiefly  concerns  the  em- 
ployer and  executive;  a  second  embraces  production 
and  distribution — problems  of  machinery  and  men; 
while  the  third  involves  the  relation  of  business  organ- 
ization to  the  whole  political  and  industrial  system. 

REVIEW 

Contrast  the  principles  of  administration  involved  in  super- 
vising the  deposit  of  a  check  for  $100,000,  and  the  answering 
of  an  overcharge  complaint  on  a  gas  bill  for  40  cents. 

What  principles  used  by  Napoleon  might  well  serve  as  the 
basis  of  business  strategy? 

A  business  executive  refuses  to  consult  his  experts,  superin- 
tendents, foremen  and  others  in  forming  his  policies.  Is  this 
an  evidence  of  being, a  strong  executive? 

A  large  tobacco  company  has  many  hundreds  of  retail  stores 
thruout  the  country.  What  effect  do  size,  distance,  amount  of 
business,  etc.,  have  upon  the  character  of  the  control — i.e.,  will  it 
tend  toward  collaboration  on  the  part  of  the  executives  or  toward 
centralized  personal  control?  Why? 

A    corporation    adopted   the    executive    committee    system    of 


PLANNING  23 

management.  To  overcome  the  objections  of  issuing  orders  in 
the  committee's  name,  the  orders  were  given  out  over  the  name 
of  the  general  manager.  It  was  noticed  that  the  enthusiasm  of 
both  manager  and  men  soon  dwindled.  What  were  the  reasons 
for  this  result? 


CHAPTER  III 

EXECUTIVE  ORDERS 

1.  Orders:  the  result  of  planning. — "When  at  the 
dead  of  night,"  wrote  Napoleon,  "a  good  idea  flashes 
thru  my  brain,  the  order  is  given  in  a  quarter  of  an 
hour,  and  in  half  an  hour  it  is  being  carried  out  by  the 
outposts."  In  civil  administration  giving  orders  is 
so  often  tied  up  with  red  tape  that  the  time  lost  far 
outweighs  the  advantage  of  having  checks  to  avoid 
errors.  Nor  is  the  curse  of  red  tape  confined  to  older 
communities.  Witness  the  experience  of  a  postmaster 
under  the  Commonwealth  of  Australia  who  wanted  to 
have  a  table  made.  An  official  report  records  the  cor- 
respondence as  follows : 

Postmaster  to  Postal  Inspector,  date  June  25th. 

Postal  Inspector  to  Deputy  Postmaster-General,  date 
June  29th. 

Deputy  Postmaster-General  to  Works  Director,  date 
July  2nd. 

Works  Director  to  District  Inspector  for  report  and  esti- 
mate, date  July  8th. 

District  Inspector  to  Works  Director,  date  July  15th. 

Works  Director  to  Deputy  Postmaster-General,  date 
July  17th. 

Deputy  Postmaster-General  to  Postal  Inspector,  date 
July  21st. 

Postal .  Inspector  to  Deputy  Postmaster-General,  date 
July  22nd. 


EXECUTIVE  ORDERS  25 

Deputy  Postmaster-General  to  Works  Director,  date  July 
26th. 

Works  Director  to  Accounts  Branch,  date  July  28th. 

Accounts  Branch  to  Works  Director,  date  August  6th. 

Works  Director  to  District  Inspector,  for  action,  date 
August  13th. 

"Seven  precious  weeks  to  have  a  table  made,"  says 
the  report. 

If  the  first  step  in  administration  is  planning,  the 
second  is  issuing  orders.  A  decision  having  been 
reached,  orders  must  be  given.  Leaders  in  war, 
rulers  of  nations,  and  managers  of  business  may  spurn 
collaboration  when  they  are  formulating  their  plans, 
but  they  cannot  do  without  assistance  when  they  issue 
orders.  Even  Napoleon,  who  "not  only  took  the 
initiative  in  thought,  but  also  attended  personally  to 
the  details  of  every  piece  of  business,"  developed  a 
rudimentary  staff,  whose  business  it  was  to  take  orders 
and  see  that  they  were  delivered.  Yet  neither  Ber- 
thier  nor  Talleyrand  ever  gave  an  order  or  wrote  a 
dispatch  which  had  not  been  dictated  by  Napoleon. 
If,  instead  of  military  commander  and  emperor,  Na- 
poleon had  been  a  railroad  magnate,  Berthier  his  chief 
of  staff  and  Talleyrand  his  secretary  of  state  would 
have  been  glorified  train  dispatchers. 

2.  Fundamentals  in  organization. — When  one  man 
attempts,  as  did  Napoleon,  to  shoulder  all  the  respon- 
sibility, we  may  have  an  effective  business  machine  so 
long  as  his  health  and  energy  endure,  but  organiza- 
tion will  be  lacking.  Especially  in  execution  does 


86     FACTORY  AND  OFFICE  ADMINISTRATION 

organization  imply  a  division  of  responsibility.  It  is, 
in  fact,  the  cooperation  of  subordinate  chiefs,  each  with 
a  limited  field  of  action  within  which  he  is  responsible, 
which  constitutes  organization.  Under  such  a  sys- 
tem the  executive  has  so  classified  the  essentials  of 
his  business  that  the  necessary  commands  and  orders 
originate  at  the  natural  source  of  supreme  or  subordi- 
nate authority  according  to  their  importance,  and 
are  issued  by  the  authority  which  can  supervise  them 
most  effectively. 

3.  Organization  of  executive  work. — The  great 
executive  delegates  the  superintendence  of  subordi- 
nate activities  to  others,  but  he  realizes,  like  Napo- 
leon, that  he  is  "the  greatest  slave  of  all  mankind, 
obliged  to  obey  a  master  who  is  heartless,  the  calcula- 
tion of  events  and  the  nature  of  things."  To  control 
these  events  and  master  the  nature  of  things,  the  exec- 
utive builds  up  an  organization  which  will  take  care 
of  details  without  his  personal  intervention,  and  thus 
leave  him  free  to  work  out  his  larger  problems. 

The  principle  may  be  illustrated  in  the  small  detail 
of  office  correspondence.  This  may  be  so  arranged 
that  only  the  most  important  matters  come  to  the  at- 
tention of  the  manager,  by  some  such  procedure  as 
the  following: 

1.  An  office  employe  sorts  the  mail. 

2.  Certain  letters  need  only  the  manager's  atten- 
tion, and  are  turned  over  to  him  for  his  careful  con- 
sideration. 

3.  Some  letters  contain  only  certain  sections  that 


EXECUTIVE  ORDERS  27 

need  his  attention.     These  are  checked,  so  that  he  may 
come  to  the  point  without  unnecessary  reading. 

4.  Notes  are  made  of  other  letters  that  deal  with 
certain  points  which  must  come  to  his  attention. 

5.  Many  letters  do  not  need  to  be  considered  by 
him  at  all.     Routine  letters  thus  can  go  to  the  proper 
department  at  once. 

Following  similar  principles,  the  executive  does  not 
himself  issue  every  order  but  only  certain  ones;  he 
does  not  run  to  the  files  or  record  books  but  has  them 
put  on  his  desk ;  he  does  not  construct  tables  of  figures 
from  a  mass  of  records  before  him,  but  studies  the 
totals  of  results,  charted  by  someone  else  for  his  ready 
comprehension. 

4.  Classes  of  orders. — Orders  issued  by  the  execu- 
tive must  be  clear  and  explicit  if  the  expected  results 
are  to  follow.     Orders,  it  will  be  found,  are  of  two  dis- 
tinct classes — one  designed  to  produce  general  efforts, 
the  other  directed  to  the  performance  of  typical  tasks. 
A  military  commander  divides  his  orders  into  general 
orders  and  special  orders ;  a  general  manager  in  busi- 
ness speaks  of  shop  and  office  policies,  and  production 
orders  and  office  instructions. 

In  order  that  we  may  make  this  distinction  clear,  we 
shall  again  revert  to  military  history.  Let  us  examine 
a  general  order  issued  by  Napoleon  to  his  chief  of 
staff,  and  then  trace  its  further  developments  into  a 
series  of  special  orders  to  the  several  commanders 
involved. 

5.  An  example  of  general  orders. — On  October  12, 


28     FACTORY  AND  OFFICE  ADMINISTRATION 

1806,  having  decided  to  strike  the  Prussians  at  Jena, 
Napoleon  gave  his  general  orders  to  Berthier.  Re- 
membering that  his  principles  of  war  were  concentra- 
tion of  forces  and  rapidity  and  secrecy  of  movement, 
we  observe  that  these  orders  are  the  clear  and  con- 
cise expression  of  the  Emperor's  purpose — about  150 
words  in  all,  yet  embracing  general  orders  for  seven 
commanders : 

Give  orders  to  Marshal  Davout  to  leave  his  position  for 
Naumberg,  where  he  must  arrive  as  quickly  as  possible,  but 
always  holding  his  troops  ready  to  fight.  He  will  be  pre- 
ceded by  all  his  light  cavalry,  which  will  send  out  skirmishers 
as  far  as  possible,  as  much  for  the  purpose  of  obtaining  news 
of  the  enemy  as  to  make  prisoners,  stop  baggage  and  get  accu- 
rate information. 

General  Sahuc's  division  of  dragoons  will  be  under  his 
orders.  It  will  proceed  to  Mittel-Pollnitz  where  it  will  receive 
Marshal  Davout's  orders.  Prince  Murat  and  Marshal 
Bernadotte  are  also  ordered  to  Naumberg,  but  are  to  follow 
on  the  Zeitz  road. 

Marshal  Lennes  proceeds  from  Neustadt  to  Jena,  Marshal 
Angereu  proceeds  to  Kahla,  Marshal  Ney  will  be  at  Mittel- 
Pollnitz.  Headquarters  will  be  at  Gera,  no6n. 

Give  orders  for  sending  off  of  the  divisions  of  heavy 
cavalry  and  the  divisions  of  dragoons  which  have  remained 
in  the  rear,  as  well  as  the  park  of  artillery,  to  Gera. 

6.  General  orders  converted  into  special  orders. — 
Berthier,  the  chief  of  staff,  having  received  Napo- 
leon's general  orders,  proceeded  to  write  to  each  of  the 
commanders  those  instructions  which  pertained  spe- 
cifically to  him.  Taking  as  an  example  Berthier 's 
special  order  to  Marshal  Davout,  we  find  that  hardly 


EXECUTIVE  ORDERS  29 

a  word  is  added  to  the  general  orders — such  was  Na- 
poleon's method  in  this  one-man  type  of  management. 

A  few  hours  later,  Davout,  having  received  his  or- 
ders, immediately  assembled  his  troops  and  gave  them 
their  instructions  regarding:  1,  the  route  to  be  fol- 
lowed; 2,  the  order  of  march  (first,  second,  third  di- 
vision, etc.) ;  3,  the  formation  of  the  troops  (in  a 
mass). 

7.  Strength  and  weakness  of  these  orders. — The 
success  of  Napoleon's  method  depended  upon  the  se- 
crecy and  rapidity  with  which  orders  were  carried  out. 
On  an  average  of  two  hours  after  the  receipt  of  the 
army  orders  by  the  commander  of  a  corps,  the  troops 
were  in  motion. 

The  weakness  of  the  method  is  evidenced  by  an 
examination  of  the  orders  which  he  issued.  These 
special  orders,  as  Colonel  Vachee  in  his  "Napoleon 
at  Work,"  says, 

Show  by  their  tone  the  incorrectness  of  style,  the  numerous 
omissions,  that  they  were  written  by  secretaries  after  the 
dictation  of  Berthier,  who  had  before  him  the  Emperor's 
general  order,  which  he  occasionally  completed  by  drawing 
upon  information  received  verbally  and  perhaps  set  down  in 
his  green  notebook. 

A  glance  will  show  that  this  method  lent  itself  to  a 
multiplication  of  omissions  and  an  increasing  of  errors. 
Vachee  says  further: 

These  orders,  altho  verbose,  contained  little;  the  object  of 
the  march,  the  position  of  the  army  and,  in  the  case  of  the 
corps  in  the  front  line,  instructions  to  obtain  information 

IV— 4 


30     FACTORY  AND  OFFICE  ADMINISTRATION 

concerning  the  enemy.  But  as  to  what  the  general-in-chief 
himself  knew  about  the  enemy,  as  to  the  ensemble  of  the  pro- 
jected maneuver  and  the  mission  of  each  corps  in  that 
maneuver,  there  is  no  mention.  .  .  .  the  commanders  were 
marching  in  the  dark  and  could  with  difficulty  show  initiative. 
There  was  no  indication  as  to  either  zones  covered  while  on 
the  march  or  the  routes  to  be  followed  by  each  of  the  army 
corps.  The  commanders  of  the  corps  chose  the  roads  leading 
to  destinations  fixed  for  them  and  sent  in  the  information  to 
imperial  headquarters. 

If  we  wish  to  get  the  full  significance  of  this  pas- 
sage, as  it  might  apply  to  any  administrative  activity 
in  business,  we  may  reread  it,  substituting  for  the 
words,  march,  army,  corps,  enemy,  general-in-chief, 
maneuver,  commanders,  imperial,  the  words:  sales, 
sales  organization,  salesmen,  competitors,  general 
manager,  campaign,  sales  agents,  corporation.  With 
these  substitutions,  the  passage  reads  like  a  modern 
auditor's  report  explaining  the  causes  for  the  bank- 
ruptcy of  some  business  concern  which  he  has  ex- 
amined. 

8.  Napoleon's  methods  not  practicable  for  smaller 
men. — Men  with  but  a  fraction  of  his  genius  have  be- 
lieved themselves  Napoleons  in  war  and  in  business. 
They  have  believed  that  only  thru  one  master  mind 
could  operations  be  successfully  conducted,  and  have 
been  equally  sure  that  theirs  was  the  master  mind. 
They  have  not  reckoned  with  the  fact  that  many  types 
of  modern  business  demand  for  their  conduct  a  labor 
which  exceeds  the  physical  and  intellectual  force  of 
any  one  man;  they  call  for  administrative  methods 


EXECUTIVE  ORDERS  31 

which  involve  the  employment  of  numerous  staff 
officers,  experts  who  have  the  confidence  of  the  gen- 
eral manager. 

In  the  larger  concerns  of  today  no  simple  form  of 
organization  could  be  applied,  and  even  lesser  con- 
cerns are  coming  more  and  more  to  recognize  the  ad- 
vantages of  effective  organization. 

9.  Improvised  administration. — If  collaboration  in 
administrative  planning,  orders  and  supervision  work 
so  well,  one  might  well  ask  why  Napoleon  did  not 
adopt  it.  Why,  if  the  excellence  of  such  methods  is  so 
great,  have  they  not  been  more  widely  adopted  by 
business  men  in  all  parts  of  the  world? 

The  answer  to  the  first  question  is  that  the  scien- 
tific method  of  preparation  takes  time.  Neither  in 
France  nor  in  the  countries  opposing  her  did  the  mili- 
tary situation  in  the  Napoleonic  era  admit  of  the  slow 
collaboration  method  of  preparation. 

Nor  is  the  answer  to  the  second  question  different. 
Men  shrink  from  the  labor  of  reorganizing  going  con- 
cerns. The  business  man  recognizes  that  such  a  re- 
organization involves  a  greater  reliance  upon  the 
judgment  of  others.  He  is  doubtful  whether  he  can 
find  men  upon  whom  he  can  rely.  If  he  trains  them 
up  in  his  own  business  he  knows  only  too  well  that 
staff  officials  who  possess  sufficient  information  and 
judgment  to  work  out  complicated  problems  in  their 
departments,  and  who  can  collaborate  with  intelli- 
gence and  sympathy  in  building  up  general  policies, 
are  but  slowly  developed. 


32     FACTORY  AND  OFFICE  ADMINISTRATION 

If  military  organization  has  gone  further  than  busi- 
ness, in  systematic  preparation  for  the  emergencies 
which  may  call  it  into  action,  it  is  because  it  is  easier  to 
convince  a  nation  of  a  public  need  than  to  impress 
upon  successful  men  of  business  the  value  of  new 
forms  of  carrying  on  their  work. 

REVIEW 

In  giving  orders,  what  advantages  come  from  having  the  ex- 
ecution follow  as  soon  as  possible  a  decision  to  act? 

How  would  you,  as  a  business  executive,  apply  to  yourself 
the  words  of  Napoleon  who  said,  "I  am  the  greatest  slave  of  all 
mankind,  obliged  to  obey  a  master  who  is  heartless,  the  calcula- 
tion of  events  and  the  nature  of  things  "  ? 

State  the  advantages  which  come  to  an  executive  from  so  ar- 
ranging his  daily  work  that  it  permits  him  to  hit  the  highest  and 
most  important  spot  first. 

As  a  business  man,  criticize  the  order  given  by  Napoleon  to 
Berthier  (page  28). 

Why  should  the  factory  or  office  executives  be  thoroly  trained 
in  administrative  policies  before  a  highly  specialized  functional 
control  is  adopted  in  place  of  the  centralized,  personal  manage- 
ment? 


CHAPTER  IV 

EXECUTIVE  SUPERVISION 

1.  Third  function  in  leadership. — In  all  forms  of 
administration  there  are  three  elements  which  are  al- 
ways present — planning,  giving  orders  and  super- 
vision.    Two  of  them  have  been  discussed  and  it  now 
remains  to  consider  the  third.     The  order  in  which 
they  have  been  named  indicates  not  only  their  se- 
quence in  time,  but  also,  in  the  judgment  of  the  best 
thinkers  of  today,  their  order  of  importance. 

Giving  planning  the  first  place  and  relegating  su- 
pervision to  a  third,  runs  counter  to  the  general  opin- 
ion of  the  past,  one  which  is  widely  held  at  pres- 
ent. Many  are  still  disposed  to  place  the  greater 
emphasis  on  supervisory  and  directing  activities. 
They  think  of  the  executive  as  seeing  that  his  orders 
are  carried  out,  they  picture  the  manager  as  in  the 
midst  of  affairs  directing  one  man,  correcting  another 
— the  center  about  which  all  the  activities  are  grouped. 

2.  Conditions    calling    for    direct    supervision. — 
Earlier  military  and  industrial  activities  could  pros- 
per only  with  highly  developed  direct  supervision; 
improvised  methods  called,  of  necessity,  for  continuous 
and  strenuous  activity  on  the  part  of  those  in  control. 
The  qualities  which  made  these  activities  fruitful  were 

33 


34     FACTORY  AND  OFFICE  ADMINISTRATION 

extolled  as  executive  virtues.  Ability  to  command; 
to  instil  fear;  to  inspire  enthusiasm;  to  "get  action"; 
to  show  results;  in  such  terms  was  executive  ability 
described.  » 

Under  modern  conditions  planning  is  receiving 
larger  recognition  as  the  chief  element  in  administra- 
tion. "A  wise  direction  is  of  more  avail  than  over- 
whelming numbers,  sound  strategy  than  the  most  per- 
fect armament" ;  or,  if  we  wish  to  carry  the  figure  into 
the  field  of  industry,  "a  wise  policy  is  of  more  avail 
than  a  large  plant,  good  management  than  perfect 
equipment."  But  wise  policies  and  good  manage- 
ment are  the  result  of  thoughtful  reasoning  rather 
than  of  improvised  expedients. 

3.  Limitations  in  administrative  supervision. — It  is 
a  not  infrequent  failing  among  administrators  to  as- 
sume responsibilities  for  which  they  are  not  fitted,  and 
to  take  over  the  direction  of  affairs  in  which  they  are 
not  expert,  merely  because  their  position  gives  them 
the  power  to  do  so.  In  national  life,  military  organ- 
ization and  operation  are  held  to  be  subordinate  to  the 
aims  of  diplomacy.  Yet  no  diplomat  would  attempt 
the  supervision  of  armies  in  a  campaign.  In  indus- 
try, on  the  other  hand,  those  who  manage  the  finances 
and  control  general  policies,  sometimes  feel  that  they 
can  with  equal  facility  manage  the  operations  of  the 
plant  and  of  the  sales  department.  In  many  cases 
this  may  be  true,  but  the  possession  of  power  does  not 
necessarily  imply  the  capacity  to  use  it  intelligently. 

Supervision,  like  planning  and  giving  orders,  in- 


EXECUTIVE  SUPERVISION  35 

eludes  a  variety  of  activities.  If  this  part  of  admin- 
istration is  to  be  well  conducted,  there  must  be  a  clear 
understanding  of  these  activities  and  their  mutual  re- 
lations. When  this  is  had  specialization  appears. 
Authority  and  responsibility,  general  matters  and 
routine  details  are  so  distinguished  that  the  several 
spheres  of  supervision  become  arranged  as  a  perfect 
system,  providing  "an  avenue,"  as  Professor  E.  D. 
Jones  says,  "for  the  downward  passage  of  ideas  asso- 
ciated with  initiative,  and  the  upward  movement  of 
facts  connected  with  response." 

4.  Supervision  involves  different  grades   of  au- 
thority.— A  proper  organization  of  supervision  in- 
volves the  marking  out  of  boundaries  between  the 
functions  of  persons  with  various  grades  of  authority. 
From  the  president  to  the  shipping-clerk,  the  giving 
of  orders  and  the  supervision  thru  inspection  and  re- 
ports form  themselves  into  a  system  whereby  super- 
vision is  effected  from  the  top  to  the  bottom,  from  the 
receipt  of  the  sales  order  to  the  shipment  of  the  goods 
and  the  payment  for  them. 

The  details  of  such  organization  must  be  left  for  a 
later  chapter.  But  whether  the  task  be  that  of  a  gen- 
eral manager  or  of  an  office  boy,  it  should  be  gov- 
erned by  certain  principles  of  sound  administration. 
What  these  principles  are  we  may  now  inquire. 

5.  First  principles  of  supervision. — One  authority 
wrote  concerning  an  army,  "Every  one  must  remain 
within  the  boundaries  of  his  duties,  otherwise  every- 
thing will  be  confusion."     This  implies  first,  the  plac- 


36     FACTORY  AND  OFFICE  ADMINISTRATION 

ing  of  responsibility,  and  secondly,  the  clear  definition 
of  the  boundaries  of  each  authority.  Like  principles 
should  guide  supervision  in  business  affairs.  Each 
superior  officer,  foreman,  department  chief,  gen- 
eral chief  should  have  a  definite  authority,  superior 
so  far  as  it  goes,  but  clearly  limited  in  its  relations  to 
that  of  other  officers.  When  a  business  is  so  organ- 
ized, when  we  find  no  overlapping  of  functions  and 
no  contentions  among  officers  as  to  their  duties,  it  can 
be  so  guided  as  to  carry  out  effectively  the  general 
policies  which  emanate  from  the  chief  executive. 

It  is  the  part  of  the  general  manager  to  supply  the 
unifying  element.  Allowing  subordinates  a  rea- 
sonable opportunity  to  exercise  initiative  does  not 
dispense  with  the  need  for  general  control.  The  su- 
pervision of  the  general  manager  aims  to  stimulate 
activity  and  to  coordinate  the  efforts  of  all  so  as  to  se- 
cure the  desired  results.  The  head  of  each  unit  of 
supervision  must  take  part  in  the  execution  of  orders, 
if  he  would  give  to  the  men  in  his  charge  the  impetus 
necessary  to  fruitful  effort. 

Such  an  impetus  comes  from  constant  and  friendly 
watching  of  the  men,  inspiring  them  thru  the  offer 
of  rewards,  encouraging  the  diligent,  by  repressing 
the  idle  and  the  careless  thru  appropriate  penalties. 

6.  The  master's  eye. — System  may  provide  an  ex- 
cellent plan  of  control,  but  it  is  of  little  avail  without 
the  "eye  of  the  master."  Orders  are  useless  unless 
carried  out;  reports  mean  nothing  unless  acted  upon 
It  is  well  for  the  "master's  eye"  to  be  diligent  in 


EXECUTIVE  SUPERVISION  37 

watching  the  business,  but  if  the  manager  attempts  to 
supervise  every  possible  detail,  he  is  apt  to  find  that 
he  has  little  time  for  weightier  matters.  Proper  plan- 
ning will  not  overburden  the  manager,  but  will  enable 
the  "master's  eye"  to  see  all  events  that  possess  any 
significance. 

It  is  not  to  be  denied  that  some  managers  appear  to 
succeed  thru  the  sheer  force  of  personal  activity. 
They  want  to  see  things  for  themselves,  they  follow 
orders  closely,  and  inspect  repeatedly  until  the  de- 
sired result  is  accomplished.  Some  old-time  execu- 
tives may  have  carried  this  method  too  far,  but  their 
practice  may  still  serve  as  a  lesson  for  managers  who 
reduce  their  physical  activities  to  sitting  in  a  hand- 
some office  and  pushing  a  button,  and  for  department 
heads  who  confuse  seclusion  from  their  men  with  ex- 
clusion of  details.  Heads  and  heels  both  play  a  part 
in  proper  supervision  and  neither  can  be  neglected 
with  impunity. 

7.  Expectation  of  surprises. — We  often  compare 
man's  life  to  a  book.  The  comparison  is  good.  The 
events  of  life  are  the  stuff  that  books  are  made  of. 
If  the  author  would  interest  his  reader,  however,  he 
must  arrange  his  story  so  as  to  surprise  him  con- 
tinually. It  is  the  unexpected  that  keys  all  men  to 
the  sticking  point.  Surprise  is  as  necessary,  too,  in 
keeping  men  interested  in  their  work  as  in  holding  the 
interest  of  the  reader  in  his  book.  Supervision  which 
neglects  the  element  of  surprise  fails  in  its  purpose. 

Important  as  this  element  of  administrative  pro- 


38     FACTORY  AND  OFFICE  ADMINISTRATION 

cedure  is,  it  is  a  mistake  to  attain  it  at  the  expense  of 
other  and  perhaps  equally  important  principles. 
Foremen  sometimes  seek  this  element  of  surprise  by 
looking  thru  keyholes  or  slipping  unnoticed  into  rooms 
in  order  to  "get  the  goods  on  the  men."  They  may 
get  what  they  want,  but  in  so  doing  they  sacrifice 
something  which  is  priceless — the  good- will  and  confi- 
dence of  the  men. 

It  is  not  necessary  to  resort  to  underhand  methods 
to  introduce  into  inspection  the  element  of  surprise 
which  saves  it  from  becoming  a  deadening  and  ineffec- 
tive routine.  Napoleon  was  always  doing  the  unex- 
pected. In  his  inspection  he  came  and  went  before 
men  were  aware.  He  was  thoro,  but  added  the  unex- 
pected. Finding  a  sentry  asleep  at  his  post,  he  took 
his  gun  and  stood  guard  until  the  weary  soldier  awoke. 
Reviewing  his  troops,  he  asked  unexpected  questions 
of  his  officers.  The  routine  method  would  have  de- 
manded that  the  commander-in-chief  gallop  more  or 
less  brilliantly  in  front  of  the  men,  but  not  so  with 
Napoleon.  Stopping  in  front  of  a  colonel,  he  asked, 
"What  is  your  effective  force?  How  many  men  have 
you  in  hospital?  At  the  depot?  And  how  many  sick 
in  camp  or  how  many  absent  from  any  other  cause?" 
One  can  easily  understand  how  such  methods  kept 
men  and  officers  continually  on  the  alert.  Each  one 
felt  that  the  Emperor  had  his  eye  on  him,  and  each 
stood  in  constant  expectation  of  a  surprise. 

8.  Supervision  by  inspection. — A  supervisory  unit 
should  not  be  extended  in  its  operations  beyond  the 


EXECUTIVE  SUPERVISION  39 

point  where  it  can  do  well  the  work  intrusted  to  it. 
If  the  proper  quality  of  output  cannot  be  had, 
or  if  the  men  cannot  be  keyed  up  to  their  full  work- 
ing capacity,  the  unit  is  too  large.  It  should  be 
of  a  size  to  permit  fruitful  personal  inspection,  which 
can  bring  all  matters  to  the  attention  of  the  manager. 
No  business,  however,  can  afford  a  system  of  super- 
vision which  calls  for  the  master's  personal  inspection 
at  every  turn,  and  reliance  must  be  had  upon  subordi- 
nates. 

If  planning  outlines,  the  direction  of  supervision 
inspection  furnishes  the  test  of  adequate  control. 
The  executive,  therefore,  who  can  control  effectively 
only  thru  personal  inspection  must  have  his  authority 
curtailed  accordingly.  The  test  of  modern  factory 
and  office  efficiency  is  measured  by  the  extent  to  which 
inspection  can  be  stretched  and  still  maintain  ade- 
quate control.  One  minute  of  a  ten-thousand-dollar 
expert's  time  may  be  so  utilized  as  to  affect  the  activi- 
ties of  a  whole  department. 

9.  Symptomatic  details.— An  office  manager  steps 
into  a  department,  gives  a  glance  and  departs.  A 
stranger  in  so  brief  a  time  would  have  seen  nothing; 
the  experienced  eye  of  the  executive  has  caught  essen- 
tial points  by  which  he  judges  the  whole.  The  details 
by  which  a  physician  judges  the  condition  of  his  pa- 
tient are  called  symptomatic  details,  and  the  same  ex- 
pression may  properly  be  applied  to  the  signs  by 
which  the  administrator  of  a  business  concern  judges 
its  activities. 


40     FACTORY  AND  OFFICE  ADMINISTRATION 

One  of  Napoleon's  principal  anxieties  was  the  num- 
ber of  available  combatants.  Continually  on  the  look- 
out for  any  symptom  showing  the  changes  in  the 
number  of  his  men,  he  studied  the  muster  rolls  from 
one  to  two  hours  every  day  until  the  twenty  thick 
volumes  which  came  to  him  every  month  were  ana- 
lyzed. "I  leave  everything  else,"  said  he,  "  to  see  the 
difference  between  one  month  and  another."  Thus 
the  leader  was  able  to  verify  the  execution  of  his 
orders  and  the  force  available  for  carrying  them  out, 
altho  he  was  not  always  able  to  be  present. 

Shop  and  office  executives  must  likewise  examine 
their  muster  rolls  if  they  would  impress  their  subordi- 
nates with  evidence  of  their  vigilance.  Orders  given 
in  their  names  must  be  checked,  and  that  this  may  be 
done  economically  and  efficiently  the  supervision  must 
be  carried  on  by  calculations  based  on  the  selection 
and  observation  of  symptomatic  details. 

If  supervision  is  to  be  efficient,  its  nature,  its  limi- 
tations and  the  essential  elements  of  the  different 
methods  must  be  studied.  Thus  we  find  that  super- 
vision resolves  itself  into  that  factor  of  administration 
whereby  the  functions  of  control  and  direction  are  so 
distributed  and  coordinated  that  the  greatest  economy 
of  time,  effort  and  expense  may  be  achieved  thru  the 
cooperation  of  all  the  units,  and  yet  without  destroy- 
ing the  initiative  of  any  subordinate  unit. 

But  an  esprit  de  corps  is  as  necessary  as  initiative 
and  mechanical  cooperation.  This  is  gained  thru  the 
inspiration  of  the  master  spirit  in  supervision,  be  he 


EXECUTIVE  SUPERVISION  *1 

chief  clerk  in  the  dictaphone  department  or  general 
manager,  for  upon  him  depends  the  unity  which  abil- 
ity and  open-mindedness  in  the  leader  can  alone 
inspire.  Given  these  qualities  in  a  manager,  the  es- 
sential elements  in  supervision,  such  as  surprise,  in- 
spection and  rewards  and  penalties,  adapt  themselves 
to  methods  best  suited  to  the  circumstances  engen- 
dered by  local  conditions.  Tact,  courage,  courtesy 
and  all  the  other  qualifications  of  a  successful  man- 
ager are  drawn  upon  as  the  occasion  requires,  and  as 
these  are  induced  naturally,  the  acts  of  giving  orders, 
inspection  and  the  bestowing  of  rewards  and  penalties 
reduce  friction  to  the  minimum  while  contributing 
to  the  general  spreading  of  good-will. 

REVIEW 

How  may  an  organization  provide  for  the  placing  of  re- 
sponsibility and  at  the  same  time  get  the  unifying  element  of 
an  administrator's  personality? 

State  the  limitations,  as  you  see  them,  to  the  purely  mechanical 
means  of  supervision. 

Show  how  the  element  of  surprise  in  management  keeps  the 
employe  on  the  alert. 

What  relation  does  the  expert  bear  to  inspection  in  modern 
factory  or  office  management? 

What  are  some  of  the  "symptoms"  by  which  a  superintendent 
may  judge  the  conditions  of  a  department? 


CHAPTER  V 

REWARDS  AND  PENALTIES 

1.  Fear  cmd  interest. — Most  men  who  are  in  au- 
thority in  factory  and  office  are  consciously  or  uncon- 
sciously guided  in  their  administration  by  the  feeling 
that  the  two  levers  which  move  men  are  fear  and  inter- 
est.    They  believe  that  no  man  shows  zeal  unless  he 
is  anxious,  and  according  to  their  native  bent  strive  to 
change  this  anxiety  into  the  fear  of  punishment  or  the 
hope  of  reward. 

Two  leading  methods  of  administration  result ;  first 
ruling  by  division,  and  second,  rewarding  by  titles 
and  prizes.  Such  methods  rely  for  their  success  on 
an  appeal  to  man's  imagination  or  his  vanity,  rather 
than  on  an  understanding  of  the  deep-lying  sense  of 
what  is  right  and  just. 

2.  Ruling   by  division. — There   is   an  old  Latin 
maxim  that  "He  who  would  rule  should  divide."     It 
expresses  the  fact  that  when  men  are  divided  in  their 
interests   they  are  unable  to  make  common   cause 
against  their  leader,  and  thus  the  leader's  position  is 
secure. 

While  visiting  a  large  factory  in  Brussels,  an  in- 
vestigator was  told  by  the  works'  manager  that  he  re- 
lied chiefly  upon  this  administrative  policy.  The  vis- 
itor's note-book  contains  the  following  comment :  "A 

42 


REWARDS  AND  PENALTIES  43 

manager  of  superior  capacities,  yet  fearing  every  form 
of  superiority  in  his  subordinates.  He  seems  secure, 
but  is  surrounded  by  an  atmosphere  of  jealousy, 
servility  and  anxiety." 

This  method  is  based  on  the  weakness  of  human  na- 
ture, and  not  on  its  strength.  Instead  of  seeking  to 
preserve  independence  of  character  and  thought 
among  his  men,  and  then  welding  their  labor  into  one 
unified  effort,  this  manager  adopted  a  cheaper  means, 
which  obtained  unity  of  action  only  so  long  as  the 
master's  prestige  remained  intact.  Fear  may  be  a 
powerful  motive  to  action  but  it  is  not  one  upon  which 
a  permanent  organization  can  be  successfully  founded. 

3.  Prizes  and  distinctions. — The  appeal  to  fear 
brings  eye  and  lip  service  but  it  takes  the  heart  out  of 
man,  and  one  whose  heart  is  not  in  his  work  cannot 
accomplish  much.  Far  more  effective  is  the  method 
of  rewarding  good  service  by  prizes  and  distinctions. 
The  business  world  swarms  with  promotion  plans, 
wage  schemes,  profit-sharing  systems  and  bonus  quota 
and  prize  rewards,  all  of  which  have  for  their  aim  to 
bring  out  men's  effort  by  enlisting  a  personal  interest. 
If  a  salesman  makes  a  good  record  he  is  put  in  a 
special  class,  and  may  be  given  a  particular  district  as 
a  special  honor.  His  picture  appears  on  the  first  page 
of  the  house  organ,  he  receives  a  prize  of  a  gold  watch, 
and  so  on.  The  material  reward  is  often  of  slight 
value;  it  is  the  distinction  which  is  prized.  Someone 
made  the  objection  to  Napoleon  that  the  crosses  and 
ribbons  of  the  Legion  of  Honor  which  he  founded 


44     FACTORY  AND  OFFICE  ADMINISTRATION 

were  mere  baubles.     "You  call  them  baubles,"  he  said ; 
"well,  it  is  with  baubles  that  men  are  led." 

Whether  or  not  these  adjuncts  to  business  adminis- 
tration are  to  be  commended  depends  altogether  upon 
the  spirit  which  is  behind  them.  If  they  appeal 
merely  to  cupidity  and  vanity  they  are  not  an  effective 
force  for  permanent  results.  They  must  be  means 
to  an  end,  and  that  end  must  be  the  cultivation  of  in- 
terest in  and  loyalty  to  the  organization. 

4.  Associated  interests. — No  system  of  rewards  is 
vitalizing  unless  it  is  permeated  with  the  spirit  of  as- 
sociated interests.     Unless  it  aids  to  induce  among  all 
the  members   of  the  organization,   no  matter  how 
humble,  the  feeling  that  their  interests  are  wrapped  up 
in  the  welfare  of  the  whole,  it  will  fail  to  reach  the 
highest   efficiency.     It  is  toward  this  ideal  that  in- 
telligent business  administration  is  constantly  striv- 
ing.    In  the  measure  that  it  consciously  fosters  this 
spirit,  it  rises  above  low  standards.     It  discards  the 
cynical  attitude  so  often  expressed  in  the  phrase  "busi- 
ness is  business,"  and  adopts  in  its  stead  the  view  that 
all  concerned,  capitalist,  administrator  and  employe 
are  cooperating  in  a  common  effort,  from  which  each 
shall  draw  the  reward  which  is  properly  due  him  and 
in  which  each  should  feel  the  true  enthusiasm  which 
springs  from  creative  effort. 

5.  Moral  basis  of  discipline. — "My  factory  is  just 
like  one  big  family,"  said  the  manager  to  a  visitor  as 
they  walked  thru  the  Port  Sunlight  soap  works  in 


REWARDS  AND  PENALTIES  45 

England.  He  had  in  mind  the  spirit  of  freedom  and 
contentment  which  should  accompany  home  life.  He 
suggested  something  further.  The  home  presents 
the  highest  development  of  social  adjustments.  The 
administrator  feels  instinctively  that  he  will  not  have 
a  finely  adjusted  and  perfectly  articulated  labor  or- 
ganization until  similar  adjustments  have  been  made. 
He  is  reaching  out  for  some  moral  basis  of  control 
which  will  adjust  the  employe  to  his  fellow- workers 
and  to  his  job  in  such  a  way  that  discipline  is  pro- 
duced, not  thru  external  authority,  but  thru  internal 
impulses. 

6.  Administrative  responsibility. — Every  football 
coach  applies  two  tests  in  selecting  his  men.  First, 
Will  the  candidate  play  the  game  for  the  benefit  of  the 
team  and  not  try  to  star?  Second,  Can  he  be  de- 
pended upon  to  attempt  the  seemingly  impossible  in 
an  emergency  ?  These  are  stringent  moral  tests  which 
apply  to  the  factory  and  office  as  well  as  to  a  football 
team.  The  coach  must  make  each  man  feel  "This  is 
my  position."  He  encourages  each  player  to  throw 
into  his  work  all  his  energy,  but  not  until  the  "posi- 
tion" becomes  a  literal  part  of  him  does  he  permit  a 
player  to  speak  of  "my  position." 

The  subtlest  task  in  the  field  of  administration  is 
to  turn  "the  job"  of  each  worker  into  "his  job."  To 
call  out,  train  and  reward  the  best  and  highest  in  men 
calls  for  the  best  resources  of  an  administrator.  That 
the  importance  of  the  task  is  being  recognized  is  seen 

IV— 5 


46     FACTORY  AND  OFFICE  ADMINISTRATION 

in  the  appearance  of  a  new  administrative  expert  con- 
cerned wholly  with  the  selection  and  training  of  em- 
ployes. 

7.  Expert  in  labor  selection. — The  appearance  of 
the  expert  in  any  field  of  action  indicates  that  it  is  no 
longer  economical  to  depend  upon  traditional  methods 
in  directing  important  affairs.     It  is  only  gradually, 
however,  that  this  fact  has  been  recognized.     Not  un- 
til after  years  of  struggle  have  the  lawyer,  the  doctor 
and  the  engineer  come  into  reputable  standing. 

A  like  struggle  must  be  encountered  by  the  busi- 
ness expert  who  presumes  to  act  as  a  specialist  on  em- 
ployment relations.  Two  strong  forces  are,  however, 
compelling  both  factory  and  office  to  give  careful  con- 
sideration to  the  selection,  training  and  holding  of 
their  employes.  One  force  is  the  trade-union  which 
works  outside  the  organization ;  the  other  is  the  analy- 
sis of  the  labor  "turnover"  within  the  organization. 

8.  Industrial     counselor. — Trade-unions     without 
and  labor  problems  within  are  leading  business  men 
to  seek  a  solution  of  their  difficulties  in  the  creation  of 
a  new  department,  headed  by  an  employment  man- 
ager or  industrial  counselor.     The  duties  of  such  an 
officer  are  not  as  yet  fully  differentiated,  but  the  goal 
that  the  employment  relations  are  forcing  into  sight 
involves  an  industrial  audit,  conducted  after  the  same 
method  as  that  employed  by  accountants  and  engi- 
neers.    The  report  of  such  an  audit  might  contain  the 
following  statement  of  conditions,  which  will  show 


REWARDS  AND  PENALTIES  47 

how  far  afield  a  lawyer  might  be  in  attempting  to  give 
advice : 

(a)  Analysis  of  fundamental  industrial  conditions. 

1.  Sources  of  labor  supply. 

2.  Attitude    of    the    management    toward 

labor-unions  and  other  associations. 

3.  Relation  of  the  management  to  labor  laws 

and  court  decisions  (state  and  federal) . 

4.  Public  policies    ("safety  first"  and  the 

like). 

(b)  Analysis  of  employment  conditions  within  the 
organization. 

1.  Description  of  jobs. 

2.  Selection  and  training  of  employes. 

3.  Wage    system;    method   of    payment — 

rates,  amounts,  etc. 

4.  Labor  turnover. 

5.  Safety ;  sanitation,  health,  education,  etc. 

This  field  of  what  may  be  termed  "industrial  audit- 
ing" is  still  young,  and  its  technic  is  not  fully  devel- 
oped. The  system  is  being  tried  out,  however,  and 
its  possibilities  are  being  proved  by  the  test  of 
practice.  The  preparation  of  such  an  audit  would 
bring  before  a  concern  such  businesslike  questions  as 
these :  What  are  the  fruitful  sources  of  labor  supply 
for  the  factory  and  the  office?  Except  for  the  grades 


48     FACTORY  AND  OFFICE  ADMINISTRATION 

of  labor  at  the  bottom,  does  the  firm  find  its  best 
source  of  supply  within  itself?  Are  the  channels  up, 
out  and  in  kept  open  and  carefully  guarded?  Is  the 
educational  system  of  the  concern  a  basic  factor  in  the 
methods  of  discipline?  Are  the  wastes  due  to  the  se- 
lection of  wrong  persons  minimized?  Are  useful 
suggestions  freely  offered  by  all  concerned?  Is  the 
spirit  of  cooperation  predominant,  and  is  it  firmly 
based  upon  the  knowledge  of  what  the  business  as  a 
whole  stands  for? 

These  questions  show  the  newer  conceptions  of  the 
problem  of  labor  control  as  contrasted  with  the  earlier 
ideas  of  rewards  and  penalties  based  entirely  upon  the 
bauble  theory  of  old-time  administrators. 

9.  Attitude  toward  employes. — The  attitude  of 
many  managers  toward  the  selection  and  the  discharge 
of  employes  is  one  of  extreme  indifference.  Nothing 
illustrates  this  better  than  the  manner  in  which  testi- 
monials are  frequently  written.  A  discharged  drunk- 
ard oftentimes  receives  a  testimonial  that  he  has  been 
found  sober  and  industrious  while  the  discharged  crook 
will  be  praised  for  honesty  and  industry. 

The  newer  attitude  toward  employes  is  evidenced 
in  the  interview,  the  application  blank,  the  physical 
examination  and  the  psychological  tests  which  are 
being  used  to  prove  or  disprove  the  validity  of  the 
testimonials  submitted  by  prospective  employes. 

Competition  is  forcing  business  men  to  seek  new 
economies.  All  plants  are  approaching  similar  levels 
of  competition  in  equipment,  machinery  methods, 


REWARDS  AND  PENALTIES  49 

purchasing  skill,  price  of  raw  materials  and  prompt- 
ness in  deliveries.  In  the  near  future,  the  varying 
grades  of  competitive  success  will  be  decided  by  the 
savings  made  thru  the  elimination  of  the  wastes  due  to 
a  high  labor  turnover  and  by  the  removal  of  those  mal- 
adjustments  that  prevent  a  business  organization  from 
taking  effective  root  in  modern  economic  condi- 
tions. 

10.  Causes  of  the  turnover.— The  reasons  why  men 
leave  jobs  are,  of  course,  as  numerous  as  the  chances 
for  the  misunderstandings,  mismanagement  and  mal- 
adjustments that  grow  out  of  men's  relations  to  one 
another  and  to  their  work.  Investigations  of  the  turn- 
over of  factory  labor  show  the  following  factors  which 
figure  in  it:  Abundance  or  lack  of  work,  fluctua- 
tions in  the  amount  of  work,  rates  of  wages,  character 
of  working  conditions,  efficiency  of  management,  rela- 
tions between  the  men  and  the  management,  work- 
men's opportunities  to  secure  better  work,  and  their 
qualifications  or  lack  of  qualifications  for  that  work. 
Two  cases  that  are  given  as  typical  indicate  the  na- 
ture of  the  questions  with  which  modern  management 
must  deal  in  solving  the  problem  of  turnover  wastes. 

Case  I.  In  a  lumber  mill,  in  1915,  49  men  were  dis- 
charged in  8  months  for: 

Incompetency 20 

Insubordination   13 

Drink 12 

Poor  health.  .  4 


50      FACTORY  AND  OFFICE  ADMINISTRATION 

Case  II.  In  3  metal-trades  establishments,  during 
1913,  402  men  were  discharged  for: 

Incompetency 133 

Unsteadiness  and  loafing.   36 

Disobedience 30 

Slowness,  sleepiness 16 

Drink 14 

Miscellaneous  11 

No  reason  given 162 

The  significant  thing  about  these  tables  is  the  large 
number  of  discharges  due  to  causes  which  in  most 
cases  could  have  been  avoided  by  the  exercise  of 
greater  care  in  the  selection  of  the  men,  while  un- 
doubtedly many  employes  might  have  been  saved  to 
the  firms  if  they  had  been  given  a  chance  in  other  de- 
partments instead  of  being  summarily  dismissed  when 
found  unsatisfactory. 

11.  Reduction  of  labor  turnover. — Frequency  of 
labor  turnover  is  a  source  not  only  of  vexation,  but 
also  of  expense.  Anything  which  can  be  done  to  re- 
duce the  turnover  avoids  expense  and  makes  the  fac- 
tory run  more  smoothly.  The  establishment  of  an 
employment  department  in  some  cases  produces  these 
very  satisfactory  results. 

An  instance  of  what  has  been  achieved  by  one  com- 
pany in  the  direction  of  reducing  labor  turnover  thru 
the  careful  selection  and  follow-up  of  employes,  is 
shown  by  the  following  statement: 


REWARDS  AND  PENALTIES  51 

Year  Labor  turnover 

1911   68% 

1912  61% 

1913 52% 

1914 37% 

1915 v 28% 

This  company  employs  2,300  persons  and  estimates 
that  it  costs,  on  the  average,  $50  to  replace  a  proficient 
hand.  In  the  second  year  of  the  new  system  there 
were  savings  of  about  $25,000  over  the  year  preced- 
ing its  installation.1 

12.  Labor  a  relationship. — Labor  as  one  of  the  im- 
portant relationships  in  the  structure  of  a  business  or- 
ganization, is  one  of  the  newer  conceptions  determin- 
ing the  solution  of  employment  problems.  Labor  ex- 
ists only  in  the  act  by  which  it  is  sold,  and  it  cannot 
exist  unless  it  is  given  access  to  capital.  It  is  not  a 
commodity  in  the  sense  that  the  workman  can  store  up 
stocks  of  it  to  be  used  as  a  basis  on  which  to  bargain 
for  work. 

If  a  business  organization  were  an  association  where 
the  three  prime  factors  of  labor,  capital  and  manage- 
ment which  are  engaged  in  production,  shared  alike  in 
the  profit  and  loss  and  in  the  government,  the  nature 
of  employment  and  the  consequent  wage  and  labor 
problems  would  be  entirely  changed.  But  the  busi- 
ness unit  has  been  developed  along  other  lines.  Labor 
does  not  bear  the  risk,  nor  is  it  entitled  by  law  to  a 

i  Report  of  Committee  on  Employment  Plans  for  National  Association 
of  Corporation  Schools,  1916. 


52     FACTORY  AND  OFFICE  ADMINISTRATION 

share  in  the  accumulated  stock,  the  right  of  business 
initiative,  the  management  and  the  credit  of  the  con- 
cern. These  belong  solely  to  those  who  supply  the 
capital,  while  labor  discounts  its  risks  for  a  fixed  peri- 
odical wage.  Because  of  the  exclusion  of  this  essen- 
tial factor  of  production  from  the  management,  and 
because  labor  cannot  be  accumulated  as  a  "reserve," 
the  workman  has  attempted  to  protect  his  interests 
and  to  strengthen  his  bargaining  powers  by  the  for- 
mation of  trade-unions. 

13.  Wage  relationship. — The  tendency  in  the  pay- 
ment of  wages  is  at  present  to  adjust  them  more 
closely  to  the  work  performed.  This  is  a  primary 
purpose  of  piecework.  The  reduction  of  the  term  of 
service  in  time-work  from  a  yearly,  monthly  or  daily 
basis  to  an  hourly  basis  points  in  the  same  direction. 
One  result  of  this  method  of  measuring  work  against 
pay  is  that  the  laborer  is  secure  in  his  income  only  from 
hour  to  hour,  while  the  shortest  lay-off  means  a  loss 
of  income.  This  tendency  in  the  payment  of  wages 
has  made  the  factory  laborer  feel  that  he  is  not  a 
fixed  part  of  the  organization,  and  that  his  wages,  both 
in  amount  and  in  regularity,  depend  upon  the  bargain- 
ing power  of  his  union.  It  is  not  surprising  that  his 
loyalty  should  be  to  the  union  rather  than  to  his  em- 
ployer. 

Here  is  the  weakness  of  modern  administration. 
Without  loyalty  there  can  be  little  cooperation,  and 
without  cooperation  there  can  be  no  great  advance  in 
the  science  of  administration,  under  our  present  com- 


REWARDS  AND  PENALTIES  53 

plex  system  of  industry.  The  loyalty  which  the 
worker  should  give  to  the  business  is  given  to  the  work- 
ingman's  union.  If  the  union  is  strong,  the  worker 
can  exercise  thru  it  some  influence  upon  the  conduct 
of  his  employer's  business,  even  tho  he  is  denied  any 
share  in  the  control  of  the  latter.  The  growing  influ- 
ence of  the  labor-union  upon  management  policies  is 
second  to  none  in  the  realm  of  business  administra- 
tion. With  the  increasing  influence  over  private 
enterprise  that  the  working  class  is  gaining  thru  union- 
ism, the  laborer  is  demanding  a  voice  in  the  regulation 
of  questions  of  administrative  detail  within  the  firm. 
The  relations  that  the  unions  involve,  include  not  only 
the  fixings  of  standards  of  pay,  but  also  questions  of 
the  output  of  the  individual  worker,  the  conditions 
and  the  regularity  of  employment,  the  proportion  of 
apprentices  to  the  number  of  adult  workmen  and  the 
methods  of  procedure  on  the  occasion  of  any  disagree- 
ment. All  this  means  that  the  manager  must  share 
the  administration  of  his  business  with  an  outside  body 
in  regard  to  many  questions  of  internal  organization. 

14.  Democracy  and  industrial  freedom. — Every 
step  in  the  solution  of  problems  of  employment  rela- 
tionship must  tend  toward  democracy  in  industry. 
The  manager  who  does  not  get  this  point  of  view  is 
not  taking  advantage  of  the  natural  channels  of  pub- 
lic opinion  in  his  search  for  greater  business  efficiency. 
Professor  Carver  of  Harvard  University  says: 

Two  things  and  two  things  only  are  essential  to  real 
democracy ;  the  first  is  an  open  road  to  talent ;  that  is  to  say 


54,     FACTORY  AND  OFFICE  ADMINISTRATION 

that  every  man  shall  have  an  opportunity  to  rise  to  positions 
of  power  and  responsibility  in  proportion  to  his  ability, 
regardless  of  birth,  privilege,  caste  or  other  social  barriers. 
The  son  of  a  peasant  may  become  the  ruler  in  government  or 
the  employer  in  business,  by  the  sheer  force  of  his  own  merit, 
if  he  happens  to  possess  merit.  The  second  essential  of  pure 
democracy  is  that  they  who  are  in  positions  of  power  and 
responsibility  shall  be  made  sensitive  to  the  needs  and  desires 
and  the  interests  of  those  over  whom  they  exercise  power  and 
responsibility. 

The  opportunity  to  "make  good"  is  the  reward  that 
modern  methods  emphasize  as  to  be  preferred  to  the 
bauble  rewards  of  the  older  school.  Such  a  policy 
means  constant  watchfulness  on  the  part  of  managers 
but  keeping  the  road  open  to  talent  can  be  made  a 
practical  working  principle. 

REVIEW 

Sum  up  the  arguments  pro  and  con  on  the  subject  of  control  of 
the  employe  thru  the  giving  of  titles  and  prizes. 

Why  should  a  manager  base  his  methods  of  labor-control  on 
the  strong  elements  of  human  nature  rather  than  on  the  weak 
ones? 

Explain  the  distinction  between  the  expressions,  "a  job"  and 
"my  job." 

What  is  meant  by  an  industrial  audit,  and  what  is  the  nature 
of  the  investigation  that  such  an  audit  would  involve  ? 

What  is  the  relation  of  the  trade-union  to  the  workingman,  and 
how  far  can  the  business  administrator  give  the  workingman 
what  the  trade-union  gives  him? 

What  are  the  purpose  and  function  of  the  employment  de- 
partment? 


CHAPTER  VI 

PRINCIPLES  OF  BUSINESS  MANAGEMENT 

1.  Administration  at  close  range. — We  are  now 
ready  to  consider  the  subject  of  administration  at 
closer  range.     Administration,  as  we  have  interpreted 
it,  applies  to  the  big  policies,  and  is  therefore  more  in- 
clusive than  the  word  "management."     We  shall  be 
concerned  henceforth  with  the  control  of  these  poli- 
cies thru  systems  and  offices,  which  may  be  termed 
"management."     As  here  used  the  term  applies  to  the 
direction  and  control  of  the  forces  which  produce  re- 
sults in  factory  or  office  operations. 

2.  Cardinal  elements  of  management. — Manage- 
ment implies  three  things — a  force,  a  purpose  or  re- 
sult to  be  accomplished,  and  a  director  of  this  force  to- 
ward the  desired  end.     With  any  one  of  these  three 
things  lacking  in  an  activity,  no  such  thing  as  manage- 
ment is  possible. 

In  a  baseball  team,  for  example,  the  members  rep- 
resent the  force  to  be  managed;  each  player  is  a 
human  dynamo.  The  winning  of  the  game  is  the  pur- 
pose, and  the  captain  directs  the  general  play  to  this 
end. 

The  use  of  the  word  "force"  to  indicate  the  body  or 
machine  employing  force  is  significant  in  itself.  We 
often  speak  of  the  "police  force,"  the  "working  force," 

55 


56     FACTORY  AND  OFFICE  ADMINISTRATION 

etc.,  when  we  mean  the  body  of  men  which  supplies  the 
energy  or  force  to  be  used  in  carrying  out  any  project. 

3.  Every  principle  implies  a  force. — The  most  im- 
portant thing  about  management,  then,  is  that  it  deals 
with  forces,  i.  e.,  energy.     This  fact  alone  raises  busi- 
ness management  into  the  realm  of  those  subjects 
worthy   of   being  treated   scientifically.     "Scientific 
management"  would  be  meaningless  jargon  if  forces 
were  not  involved.     And  it  is  well  for  the  business  man 
who  has  thousands  of  dollars  invested  in  plants,  of- 
fices, men,  fixtures,  etc.,  to  realize  this  point  at  once. 
It  will  enable  him  to  discriminate  between  the  real 
efficiency  engineer  and  the  fake  systematizer.     The 
latter  knows  nothing  of  forces.     He  knows  only  of 
forms.     The  man  who  knows  and  realizes  the  nature 
of  the  forces  working  in  a  modern  factory  or  mercan- 
tile establishment,  is  conservative.     He  realizes  the 
consequences  of  getting  in  the  way  of  these  forces.     A 
fool  will  try  to  stop  a  flywheel  with  a  piece  of  card- 
board.    Yet  unfortunately,  simply  by  reason  of  his 
assurance  born  of  ignorance,  a  fool  may  gain  the  ear 
of  an  executive.     But  the  manager  who  thinks  of  his 
business  in  terms  of  the  forces  which  he  is  guiding  can 
soon  put  to  rout  the  "business  doctors." 

4.  Nature  of  business  forces. — The  promotion  of  a 
business  enterprise  is  at  bottom  nothing  more  or  less 
than  an  attempt  to  bring  the  forces  of  capital,  labor 
and  land  together  in  such  proportions  and  with  such 
effectiveness  that  the  highest  profits  will  result  from 
their  combined  efforts.     There  is  no  common  business 


PRINCIPLES  OF  MANAGEMENT  57 

name  for  the  manager  of  an  enterprise  in  the  earliest 
or  formative  period  of  an  undertaking.  The  econo- 
mist calls  such  a  man  an  enterpriser.  If  the  title  of 
"promoter"  had  not  become  so  closely  associated  with 
the  raising  of  capital  or  the  effecting  of  combinations 
of  capital  to  the  almost  total  exclusion  of  the  other 
two  forces  of  business,  this  name  would  more 
fully  express  the  function  of  such  a  person  than  any 
other  word.  But  whatever  his  name,  a  man  of  this 
sort  is  a  manager  par  excellence.  His  plans  involve 
the  primary  union  of  the  three  business  forces,  capital, 
labor  and  land.  Poor  management  at  this  point 
means  hampered  production,  poor  distribution  or  lean 
markets  after  the  business  is  started. 

Let  the  reader  adjust  himself  at  once  to  the  point 
of  view  that  management  is  interested  in  forces  and 
not  alone  in  things,  methods  and  forms.  If  the  idea 
seems  abstract  that  management  begins  before  the 
money  is  raised  or  the  factory  started,  the  notion  can 
be  given  concreteness  by  thinking  of  the  numerous 
failures  of  managers  of  production  whose  efforts  and 
plans  were  useless  because  some  incompetent  enter- 
priser had  started  the  business  with  too  little  regard 
for  his  labor  supply.  Or  it  might  be  well  to  look  into 
the  history  of  many  managers  of  distribution,  men  who 
were  doomed  to  failure  from  the  start  because  some  en- 
terpriser had  overlooked  the  important  place  which 
location  holds  in  relation  to  freight  rates  or  delivery 
advantages.  Or,  again,  the  reader  may  find  number- 
less examples  of  good  sales  managers  whose  efforts 


58     FACTORY  AND  OFFICE  ADMINISTRATION 

were  handicapped  for  years  because  they  could  not 
develop  their  markets,  owing  to  a  lack  of  sufficient 
working  capital. 

Management,  then,  deals  with  the  three  sources  of 
force  or  energy — capital,  labor  and .  nature.  The 
management  should  never  lose  sight  of  their  important 
influence.  A  strike  which  involves  trouble  with  the 
labor  force  may  mean  many  hours  of  anxiety  for  the 
manager,  but  the  labor  loss  may  be  as  nothing  com- 
pared with  the  capital  losses  in  interest,  depreciation 
and  market  disorganization  incurred  during  the  shut- 
down. 

5.  Manager  must  direct  forces. — The  complexity 
and  extent  of  the  workings  of  a  modern  factory  are 
forcing  the  question  of  management  upon  the  atten- 
tion of  both  stockholders  and  the  public.  The  stock- 
holders are  interested  in  their  profits.  The  consum- 
ing public  is  concerned  about  the  high  cost  of  prod- 
ucts. Both  are  beginning  to  believe  that  their  inter- 
ests could  be  better  served  if  the  managers  of  produc- 
tion were  specialists  in  management  rather  than  as  is 
too  often  the  case — composites  of  abilities  ranging 
from  the  requisites  of  a  good  office  boy  to  the  accom- 
plishments of  a  mechanical  expert. 

A  manager  must  direct  forces.  He  cannot  be  tied 
to  the  details  of  an  office,  of  a  department  or  of  an 
organization.  His  special  work  is  cut  out  for  him  by 
the  forces  which  he  handles  and  the  object  which  he 
must  attain  in  their  direction  or  management. 


PRINCIPLES  OF  MANAGEMENT  59 

The  mechanical  engineer,  the  electrical  engineer, 
the  locomotive  engineer,  etc.,  have  their  own  special 
provinces.  Each  is  a  specialist  in  the  control  of  his 
particular  form  of  power.  Yet  it  has  often  been  ex- 
pected of  managers  of  production  that  they  not  only 
be  technical  experts  in  various  branches  of  an  industry, 
but  that  they  be  expert  handlers  of  men  and  judges  of 
business  methods  as  well. 

The  discussions  and  investigations  of  big  business 
operations  during  the  past  few  years  have  so  focused 
attention  upon  the  manager  that  we  are  able  to  see  his 
true  relation  to  the  organization  in  a  better  light  than 
ever  before. 

A  chart,  prepared  by  an  auditing  concern  and  re- 
produced on  page  60,  shows  in  a  very  simple  way  the 
relationship  of  the  two  chief  forces  with  which  the 
manager  must  deal. 

It  will  be  here  observed  that  the  capital,  land  and 
labor  forces  have  taken  the  form  of  plant  and  equip- 
ment, materials,  supplies  and  men.  The  manager, 
therefore,  has  jurisdiction  over  these  things  and  has 
charge  also  of  the  inspection  of  product  and  pur- 
chases. The  two  types  of  physical  energy  which  are 
most  evident  in  production,  and  which  the  manager 
must  control,  are  those  produced  by  fuel  in  conjunc- 
tion with  a  machine,  and  those  which  come  from  food 
when  converted  into  the  muscle  and  brains  of  men. 
When  the  full  importance  of  these  factors  in  man- 
agement is  realized,  it  becomes  evident  at  once  how 


60     FACTORY  AND  OFFICE  ADMINISTRATION 


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2  .— 


futile  are  systems  and  schemes  of  control  which  pro- 
vide only  records  of  results,  and  ignore  the  forces 
which  produce  results. 

6.  Human    engineering, — It    has    been    supposed 


PRINCIPLES  OF  MANAGEMENT  61 

until  very  recently  that  engineering  has  to  do  solely 
with  the  intelligent  development  and  control  of  that 
energy  which  depends  upon  fuel  and  the  machine. 
Accordingly,  the  mechanical  engineer  early  became  a 
recognized  aid  in  the  management  of  a  plant  and  fac- 
tory, and  now  that  business  men  are  beginning  to 
analyze  their  productive  processes,  the  profession  of 
engineering  has  been  extended  to  include  the  develop- 
ment and  control  of  that  energy  which  displays  itself 
thru  the  minds  and  bodies  of  men. 

A  study  of  Figure  1  shows  the  main  lines  of  activity 
which  these  two  forms  of  physical  force  follow. 
The  physical  energy  coming  from  the  food  which  a 
man  eats  shows  itself  in  either  bodily  or  mental  activi- 
ties on  the  part  of  the  worker.  In  the  factory,  then, 
we  may  divide  the  workers  into  brain  laborers  and 
body  laborers,  and  so  throw  into  bold  relief  at  once  the 
basic  problems  of  management.  These  are  the  prime 
factors  which  lie  at  the  bottom  of  all  permanent  pro- 
ductive efficiency.  The  managers  must  find  the  best 
way  to  develop  this  human  power  and  conserve  its 
energy.  Looked  at  in  this  light,  it  is  not  a  matter  of 
indifference  to  the  management  what  the  foremen,  the 
laborers  and  others  eat  and  drink  outside  of  factory 
hours.  NOT  is  it  compatible  with  the  principles  of 
business  management  to  ignore  the  sociological  condi- 
tions which  surround  the  workers  at  home  and  in  the 
shop.  Anything  which  dissipates  the  energy  of  the 
employe  is  a  handicap  to  the  productive  efficiency  of 
the  factory.  Welfare  work,  medical  service,  indus- 


62     FACTORY  AND  OFFICE  ADMINISTRATION 

trial  betterment  are  growing  and  spreading  among  the 
world's  great  industries.  This  movement  is  taking 
place  simply  because  it  is  good  business  policy.  If 
welfare  work  succeeds,  it  does  so  because  it  develops 
and  conserves  the  human  working  force.  It  pays  for 
itself  in  productive  efficiency  and  not  merely  in  its  ad- 
vertising possibilities. 

7.  Basic  principle  in  management. — Little  need  be 
said  about  the  power  which  manifests  itself  thru  the 
aid  of  machines.  This  force  in  production  is  very  evi- 
dent and  its  utilization  has  been  the  point  of  attack  for 
a  hundred  years  or  more.  In  fact,  so  much  attention 
was  given  to  this  factor  that  the  managers  of  great 
enterprises  overlooked  nearly  all  the  other  elements 
in  production.  To  get  a  new  piece  of  equipment,  a 
machine,  a  filing  cabinet,  an  adding  machine,  seemed 
to  be  the  climax  of  many  a  manager's  ambition.  Con- 
centration upon  this  single  side  of  the  proposition  has 
brought  its  penalties  as  well  as  its  rewards.  Man- 
agers fixed  their  eyes  upon  the  size  of  their  output. 
Bulk,  production  on  a  large  scale,  tonnage  became  the 
great  words  in  managerial  circles.  To  secure  these 
results  the  machine  was  developed  to  the  highest  point. 
Mechanical  invention  was  the  only  thing  considered, 
and  the  mechanical  engineer  became  the  most  impor- 
tant member  of  the  staff  of  managerial  experts. 

But  finally  the  machines  became  so  plentiful,  the 
factories  covered  so  much  space,  the  output  grew  so 
large,  the  employes  numbered  so  many  thousands, 
that  the  energy  which  was  developed  and  directed  by 


PRINCIPLES  OF  MANAGEMENT  63 

means  of  the  mechanical  equipment  began  to  be  lost 
and  wasted.  The  old  standards  of  achievement  could 
not  be  maintained  and  the  management  began  to  ask 
itself  the  reason.  The  inquiry  led  to  the  discovery  of 
the  basic  principle  in  management,  which  deals  with 
the  conservation  of  energy  and  the  correlation  of  the 
forces  of  production.  When  this  point  was  reached 
many  problems  arose  which  had  not  up  to  that  time  in- 
truded themselves.  For  example,  the  question  of  fuel 
supply  was  no  longer  a  question  of  weight  but  of  heat- 
ing power.  The  belting  problem  was  no  longer  a 
question  simply  of  price  per  foot,  but  of  lost  power 
thru  inattention  to  the  proper  belt  tensions,  etc.  Thus 
we  might  run  thru  the  whole  list  of  problems  of  man- 
agement and  find  that  in  their  last  analysis  they  all 
resolve  themselves  into  terms  of  power,  force  or  en- 
ergy. 

8.  Purpose  of  management  is  profit. — It  is  well, 
when  so  much  is  being  said  about  the  methods  of  gain- 
ing productive  efficiency,  to  draw  attention  to  the  fact 
that  the  ultimate  purpose  of  enterprise  is  profits.  A 
saving  of  energy  formerly  lost,  or  the  institution  of  a 
frictionless  organization,  may  have  other  purposes 
than  maintaining  or  increasing  the  profits ;  but  unless 
these  things  bear  upon  this  element  somewhere  in  the 
course  of  the  firm's  operations,  they  should  be  counted 
up  to  the  concern's  philanthropies  or  advertising  and 
not  to  its  productive  management.  The  manager  or 
efficiency  engineer  who  is  unable  to  organize  or  reor- 
ganize a  system  of  management  without  sacrificing 


64      FACTORY  AND  OFFICE  ADMINISTRATION 

permanent  profits  has  not  the  faintest  conception  of 
the  nature  of  his  work.  Such  a  person  is  generally 
trying  to  "instal  a  system."  It  should  be  borne  in 
mind,  however,  that  a  thorogoing  plan  of  management 
may,  and  for  that  matter  generally  does,  involve  an 
outlay  of  money  which  may  not  show  immediate  re- 
turns. A  suitable  foundation  for  a  building  may  not 
show  its  advantages  over  a  flimsy  structure  for  several 
years;  yet  a  wise  business  policy  would  not  sacrifice 
the  permanent  profits  for  the  sake  of  immediate  sav- 
ings. 

9.  Immediate  versus  future  profits. — No  one  busi- 
ness policy  has  caused  the  wrecking  of  so  many  firms 
and  the  shattering  of  so  many  managerial  reputations 
as  that  of  paying  dividends,  regardless  of  the  means  or 
source  of  income.  A  manager  must  gain  the  profits 
by  putting  the  materials  and  forces  of  production 
thru  certain  processes.  The  legitimate  gains  of  his 
activity  as  manager  show  in  a  product  of  higher  value. 
He  starts,  we  will  say,  with  a  ton  of  iron  ore,  and  after 
many  smeltings  and  purifyings  and  temperings,  thou- 
sands of  fine  steel  springs  are  produced.  So  long  as 
quality  determines  value,  and  value  determines  price, 
the  manager's  duty  is  to  shape  his  methods  toward 
meeting  the  conditions  of  that  market  the  judgment  of 
which  passes  upon  the  quality  of  all  products.  He 
therefore  turns  out  steel  springs  of  a  quality  that  satis- 
fies the  particular  demand  for  that  product.  His  in- 
fluence upon  the  profits  will  show  in  his  maintaining 
the  quality  demanded  by  the  customers,  and  in  his 


PRINCIPLES  OF  MANAGEMENT  65 

ability  to  effect  economies  in  the  use  of  the  forces  of 
production  and  in  the  handling  of  his  productive 
organization. 

But,  having  been  urged  to  show  immediate  results, 
many  managers  have  tried  to  short-circuit  their  forces 
of  production.  Instead  of  putting  the  capital  which 
should  have  gone  into  materials,  new  machines,  new 
roadbed,  new  cars,  etc.,  into  these  investments  of  pro- 
duction— investments  which  would  have  brought 
profits  in  the  future — some  managers  have  short-cut 
the  process  and  put  the  capital  directly  into  the  divi- 
dends. The  "skinning"  of  many  railroad  properties 
and  industrial  plants  by  this  short-circuit  process  was 
too  common  a  few  years  ago.  It  is  not  unknown  to- 
day, and  it  is  a  very  alluring  method  for  a  young  or 
inexperienced  manager  when  a  short-sighted  director- 
ate insists  on  "results." 

This  practice  of  sacrificing  the  permanent  profits 
for  the  immediate  "showing"  is  not  less  fatal  when 
applied  to  the  business  organization  of  a  company  than 
when  used  to  "skin"  the  equipment.  Poor  routing  of 
materials  thru  the  shops,  slack  timekeeping,  persistent 
soldiering,  bungling  storekeeping,  etc.,  may  mean  a 
very  economical  organization  for  a  certain  period,  but 
the  effects  of  such  disorganizing  practices  upon  the 
output  of  a  plant  will  prove  in  the  end  to  be  even  more 
damaging  than  the  mere  skinning  of  the  capital  or 
equipment. 

REVIEW 

Distinguish  between  the  functions  of  a  "promoter"  and  those 
of  a  general  manager  of  a  factory. 


66     FACTORY  AND  OFFICE  ADMINISTRATION 

Distinguish  between  the  activities  which  fall  within  the  prov- 
ince of  the  mechanical  engineer  and  those  that  belong  to  the 
industrial  engineer. 

Analyze  the  statement,  "The  basic  principle  in  management 
deals  with  the  conservation  of  energy  and  the  correlation  of  the 
forces  of  production." 

A  factory  manager  was  able  to  show  "good  results"  by  keep- 
ing back  new  improvements,  holding  up  needed  repairs,  etc. 
Criticize  this  policy. 


CHAPTER  VII 

WHAT  MANAGEMENT  INVOLVES 

1.  Difference  between  manager  and  engineer. — 
Management,  therefore,  involves  not  only  the  forces 
of  production,  but  careful  considerations  of  the  results 
to  be  obtained,  i.  e.,  the  profits.  It  is  the  latter  which 
distinguishes  the  man  with  managerial  ability  from 
the  purely  technical  man.  The  mechanical  en- 
gineer may  be  able  to  control  and  develop  the  pro- 
ductive forces  in  a  plant.  In  fact,  a  specialist  of  this 
kind  is  absolutely  necessary.  But  his  point  of  view  is 
narrowed  to  the  activity  of  the  machine  and  of  the  ma- 
chine's tender.  He  is  interested  in  supplying  power 
and  machines  for  getting  out  articles  according  to  cer- 
tain dimensions  and  specifications.  The  manager 
must  be  able  not  only  to  judge  the  mechanical  nec- 
essity of  this  activity,  but  also  to  estimate  its  effect  on 
the  commercial  end  of  the  business.  Commercial  ap- 
praisal must  supplement  technical  judgment.  Many 
illustrations  of  this  difference  in  abilities  might  be 
cited  from  the  experience  of  shop  men  who  have  seen 
many  a  fine  article,  from  the  engineers'  point  of  view, 
sent  into  the  factory,  only  to  be  torn  to  pieces  and 
ruthlessly  changed  by  the  manager  who  had  to  meet 
commercial  conditions. 

67 


68     FACTORY  AND  OFFICE  ADMINISTRATION 

2.  Specialization  complicates  management. — Spe- 
cialization is  both  a  result  and  a  cause  of  technical  im- 
provements ;  therefore,  we  find  the  two  developing  side 
by  side.  So  far  as  the  modern  industrial  organization 
is  concerned,  it  makes  little  difference  whether  we 
speak  of  it  in  terms  of  specialization  or  in  terms  of 
machinery.  A  study  of  any  industry  will  soon  show 
how  complex  its  organization  has  become,  thru  the 
number  of  specialties  into  which  every  process  is  di- 
vided. Generally,  each  division  requires  a  new  ma- 
chine or  tool.  If  we  compare  the  present  organiza- 
tion of  any  industry  with  the  organization  of  a  similar 
industry  of  fifty  years  ago  we  discover  that,  altho  the 
number  of  men  necessary  to  produce  a  given  quantity 
of  product  has  greatly  diminished,  the  quantity  put 
out  under  one  management  has  so  increased  that  the 
number  of  employes  has  increased  and  the  number  of 
machines  has  multiplied  accordingly. 

The  manager  has  been  engulfed  in  a  sea  of  indus- 
trial specialization.  The  correlation  of  all  the  spe- 
cial activities  has  overtaxed  the  abilities  of  managers 
for  years — that  is,  where  they  have  given  this  element 
of  management  the  consideration  it  deserves,  and  have 
not  simply  stumbled  along  trying  to  meet  every  diffi- 
culty by  adding  a  new  machine — a  method  not  unlike 
that  of  a  tired  man  urging  his  flagging  energies  to 
renewed  efforts  by  taking  stimulants.  They  get  him 
over  the  present  difficulty,  yet  they  leave  him  not  only 
debilitated,  but  hindered  by  the  drug  itself  which  clogs 
his  system. 


WHAT  MANAGEMENT  INVOLVES  69 

3.  Specialization  in  management. — Not  many  years 
ago  it  was  the  custom  to  defend  the  advantages  of 
specialization  against  the  virtues  of  all-round  skill 
— the  expert  against  the  all-round  man.  But  there  is 
little  argument  today.  The  place  of  each  is  well  un- 
derstood. In  technical  work  the  economic  superiority 
of  the  expert  is  too  much  in  evidence  to  allow  any  argu- 
ment. The  "jack  of  all  trades"  has  disappeared. 
The  change  makes  for  special  dexterity  and  great  sav- 
ing in  time  and  money.  Preparatory  expenses  are 
greatly  reduced  and  much  time  in  changing  from  one 
job  to  another  is  saved.  At  the  same  time  we  have 
come  to  recognize  that  there  is  a  distinct  and  very  im- 
portant place  for  the  all-round  man  in  executive  work 
of  the  higher  order. 

Today  there  is  a  new  form  of  specialization  going 
on,  which,  being  more  difficult  to  represent  in  a  con- 
crete form,  is  not  so  easily  understood  or  so  readily  ac- 
cepted by  the  manager.  We  refer  to  the  specializa- 
tion that  is  taking  place  in  the  field  of  management  it- 
self. Instead  of  employing  one  foreman  to  look  after 
a  whole  department  some  firms  are  breaking  up  the 
work  into  several  parts  and  are  putting  specialists  in 
charge  of  each.  Thus  there  may  be  a  gang  boss,  a 
speed  boss  and  a  disciplinarian  where  once  there  was 
only  a  foreman.  As  it  is  not  easy  to  figure  the  re- 
sults of  management  specialization  in  terms  of  a  ma- 
chine's output — a  concrete  thing  which  can  be  shaped 
and  handled  and  measured — many  executives  are 
backward  in  recognizing  the  same  economies  here  that 


70      FACTORY  AND  OFFICE  ADMINISTRATION 

they  have  so  eagerly  exploited  in  the  field  of  technical 
and  mechanical  specialization. 

4.  Department  specialization. — Between  the  two 
extremes  of  specialization,  that  of  the  machine  at  one 
end  and  that  of  the  management  at  the  other,  comes 
an  intermediate  type  of  specialization.  This  may  be 
called  departmental  specialization,  and  often  serves 
as  a  step  to  the  more  advanced  form  of  specialized 
management.  This  intermediate  type  is  illustrated 
in  the  Fierce-Arrow  Motor  Car  Works.  Here  all 
lathes  are  divided  into  groups  and  subgroups.  The 
main  groups  are  put  into  departments  by  themselves 
and  are  there  arranged  into  subgroups  according  to 
the  size,  class  of  work,  etc.  For  instance,  one  section 
is  known  as  the  turret  department  and  is  divided  into 
subgroups  of  automatic  chucking  machines,  automatic 
screw  machines,  flat  and  hexagon  turret  lathes  and 
hand  screw  machines.  The  larger  turret  lathes  of  the 
Gisholt  type  are  not  included  in  the  department,  but 
form  separate  groups.  The  hand  and  spur  gear-cut- 
ting machines  form  separate  groups.  The  milling 
machines  are  classified  as  vertical,  horizontal,  Lincoln 
type  and  hand  groups.  The  drilling  machines  are 
divided  into  radial,  heavy-duty,  medium  and  sensi- 
tive groups.  The  grinders  are  grouped  as  internal, 
plain  and  surface.  Specialized  supervision  is  thus 
naturally  induced  to  a  limited  degree,  for  an  assistant 
foreman  is  put  in  charge  of  each  subdivision  of  ma- 
chines and  is  responsible  to  the  foreman,  who  has 
direct  charge  of  the  departmental  groups. 


WHAT  MANAGEMENT  INVOLVES  71 

The  necessity  for  this  growing  practice  of  depart- 
mental grouping  is  due  to  the  great  burden  which  ex- 
tensive specialization  in  the  agents  of  production  has 
put  upon  the  manager.  Departmental  grouping  is  an 
attempt  to  bring  as  many  common  factors  as  possible 
into  one  group  for  purposes  of  supervision.  It  pro- 
vides a  more  efficient  means  of  watching  the  wastes 
and  coordinating  the  efforts  of  many  individual  and 
highly  specialized  machines.  The  experiment  of  the 
Pierce- Arrow  Company  shows  a  practical  application 
of  the  economic  principle  that  coordination  is  a  neces- 
sary complement  to  specialization  if  the  highest  effi- 
ciency is  to  be  obtained. 

5.  Cooperation  and  specialization  must  always  go 
together. — Just  as  the  forces  of  a  business  must  be  cor- 
related, and  the  machine  processes  coordinated,  so 
must  the  laboring  force  cooperate  in  order  to  let  spe- 
cialized employment  and  divisions  of  labor  produce 
their  full  results.  The  enormous  product  turned  out 
by  the  factories  and  transportation  systems  of  today  is 
possible  because  the  machine  has  developed  into  a  spe- 
cialist of  the  highest  type.  Specialization  does  not 
stop,  however,  with  the  factory  processes,  the  ware- 
house, the  bank  or  the  transportation  system.  The 
management  of  these  various  business  activities  is 
dividing  its  work  more  and  more  into  specialties. 
One  man  no  longer  tries  to  do  all  the  work  of  manag- 
ing a  factory,  but  calls  to  his  aid  superintendents,  fore- 
men and  bosses. 

Such  is  the  predominant  type  at  present  but  it  is 


72     FACTORY  AND  OFFICE  ADMINISTRATION 

rapidly  becoming  modified.  The  machines,  the  men, 
the  departments,  the  responsibilities  of  a  large  factory 
are  so  numerous  that  further  specialization  must  go 
on  if  this  century  is  to  keep  up  with  the  last  in  the  pro- 
duction of  goods. 

6.  Scientific  methods  of  investigation. — Scientific 
knowledge  rests  upon  one  great  underlying  principle 
— the  conservation  of  energy  and  the  correlation  of 
forces.  There  are,  however,  two  ways  in  which  a  sub- 
ject may  be  studied.  These  may  be  called  the  "specu- 
lative" method  and  the  "practical"  method.  The  first 
has  been  largely  instrumental  in  the  development  of 
the  sciences  of  astronomy  and  biology,  and  the  sec- 
ond has  been  chiefly  employed  for  investigations 
in  chemistry.  Sciences  differ  among  themselves  in 
the  extent  to  which  one  or  the  other  of  these  methods 
is  used,  and  it  is  essential  that  a  new  science  adopt  the 
method  most  suitable  for  its  development.  So  far  as 
management  is  concerned,  both  methods  are  applicable 
to  a  certain  degree,  but  the  practical  method,  in  which 
experiment  is  the  basis  of  drawing  scientific  conclu- 
sions, is  the  one  which  must  predominate. 

Only  a  few  deductions  can  be  drawn  in  the  science 
of  management.  But  these  few  are  most  important, 
since  they  serve  as  guides  for  the  experiments  in,  and 
analysis  of,  factory,  shop  and  office  conditions.  They 
look  to  the  avoidance  of  waste  and  the  gaining  of  in- 
creased power  thru  a  thoro  knowledge  of  men,  ma- 
chines and  conditions.  If  investigators  of  manage- 
ment problems  would  keep  this  one  idea  clearly  in 


WHAT  MANAGEMENT  INVOLVES  73 

mind,  they  would  then  at  least  be  in  the  right  attitude 
to  begin  their  study.  With  this  goal  in  view,  the  in- 
vestigator can  follow  the  practical  method  without 
confusing  his  principles  with  the  mechanism.  Such 
an  investigator  will  hold  the  factory  or  shop  in  proper 
perspective  and  will  not  feel  bound  by  traditions  and 
prejudices.  He  studies  the  departments  as  a  whole 
and  compares  them  with  those  of  other  plants  as  he 
knows  them.  This  method  enables  him  to  analyze  the 
proposition  into  units  which  permit  of  numberless  ex- 
perimental recombinations. 

All  this  takes  time  and  patience,  for  superficiality 
has  no  place  in  any  science.  Mr.  F.  W.  Taylor,  for 
instance,  to  achieve  one  result,  performed  50,000  ex- 
periments, all  of  which  were  recorded,  studied  and 
classified ;  they  involved  an  outlay  of  material  amount- 
ing to  800,000  pounds  of  steel  and  an  expenditure  of 
$200,000.  Similar  care  and  attention  must  also  be 
given  where  the  data  to  be  collected  pertain  to  men 
and  not  to  material.  The  laws  of  fatigue  and  rest  are 
even  more  complex  than  the  laws  of  materials.  It  is 
not  till  these  laws  have  been  discovered  that  standards 
of  production  can  be  established  and  methods  set  forth 
for  their  accomplishment. 

Having  the  general  proposition  clearly  in  mind, 
the  management  investigator  can  go  after  his  facts. 
Observation  and  experiment  will  be  required  to  enable 
him  to  select  the  facts  and,  from  conclusions  drawn 
from  them,  to  formulate  those  laws  by  which  he  can 
select  his  machines,  material  and  men.  Some  laws 


74     FACTORY  AND  OFFICE  ADMINISTRATION 

will  become  standards  by  which  the  workingmen  in 
any  particular  department  may  be  scientifically  se- 
lected. The  men  who  are  physically  or  temperamen- 
tally unfit  to  perform  the  duties  in  a  particular  de- 
partment may  be  taken  out  and  fitted  into  some  other 
place  more  suited  to  their  particular  abilities.  Such 
a  redistribution  of  men  results  in  a  total  increase  of 
efficiency  without  drawing  forth  more  labor  energy 
from  men  and  machines.  The  results  will  show  not 
only  that  a  scientific  method  has  been  used,  but  that  a 
scientific  object  has  been  obtained. 

7.  Continual  study  and  progress. — The  first  prac- 
tical rule  in  the  application  of  this  scientific  method  of 
adapting  the  instrument  to  purpose,  demands  not  only 
a  redistribution  of  responsibilities  but  the  establish- 
ment of  intimate  cooperation  between  managers  and 
men.  This  may  be  called  the  rule  of  sympathetic  co- 
operation, in  which  there  is  "mutual  recognition  of 
the  possibility  of  mutual  helpfulness."  An  example 
of  this  practice  is  seen  in  those  shops  where  the  chief 
distribution  of  functions  consists  of  dividing  the 
purely  mechanical  and  muscular  operations  from 
those  requiring  brain  and  effort,  and  then  select- 
ing men  who  are  particularly  fitted  for  each  kind  of 
work.  This  division  and  redistribution  of  the  func- 
tions necessitates  a  greater  degree  of  planned  cooper- 
ation between  the  two  groups  than  was  essential  under 
the  old  style  of  management.  Under  the  old  system 
the  workman  was  left  to  determine  the  method  of 
doing  his  work  as  well  as  to  do  it.  Under  the  system 


WHAT  MANAGEMENT  INVOLVES  75 

where  the  function  of  planning  is  separated  from  the 
performance,  the  method  is  given  into  the  hands  of  an 
expert  body  of  planners  and  the  workmen  are  left  free 
to  apply  all  their  energy  to  the  one  thing — the  doing 
of  the  work. 

Present-day  management,  however,  does  not  stop 
with  experiments  alone.  It  requires  that  the  facts, 
having  once  been  obtained,  should  be  used  for  the  con- 
tinual advancement  of  the  organization.  The  first 
rule  for  the  practical  administration  of  the  laws  and 
principles  which  have  been  deduced  should  be  the  se- 
lection of  proper  instructors  to  teach  the  men  upon 
whom  the  production  of  the  plant  depends.  Under 
this  rule,  a  workman,  once  selected  and  assigned  to  a 
duty  to  which  he  is  especially  adapted,  is  kept  at  his 
highest  point  of  efficiency  by  being  continually  helped 
and  taught  how  best  to  do  his  work.  The  factory  thus 
ceases  to  be  a  "mill"  and  becomes  a  school  instead. 

A  law  is  limited  by  the  circumstances  which  condi- 
tion it.  Before  any  specific  devices  are  discussed  by 
which  the  direction  of  a  business  enterprise  may  be 
changed  from  a  "hit  and  miss"  sort  of  management  to 
a  system  of  carefully  studied  control  and  direction,  it 
may  be  well  to  throw  out  the  following  caution. 
Altho  a  law,  once  formulated,  is  fixed  by  the  condi- 
tions which  gave  rise  to  it,  there  is  no  assurance  that 
the  conditions  will  not  change.  In  fact,  conditions  are 
ever  shifting  and,  as  a  consequence,  new  observations 
and  new  experiments  will  result  in  the  derivation  of 
new  laws.  No  manager  should  assume  that  any  con- 


76     FACTORY  AND  OFFICE  ADMINISTRATION 

elusion  he  may  reach  is  final.  A  rule  of  action  which 
may  guide  the  organization  today  to  higher  planes  of 
efficiency  may  later  be  rendered  obsolete  by  a  new  set 
of  conditions  and  higher  standards  of  accomplishment. 
The  manager  who  approaches  his  subject  in  the  spirit 
of  a  scientist  never  stops  because  a  cost  has  been 
reduced.  Nothing  is  final  with  him.  He  is  ever  on 
the  lookout  for  the  possibility  of  further  reductions 
and  the  discovery  of  new  and  important  laws  by  which 
these  reductions  may  be  made. 

8.  What  the  science  of  management  involves. — A 
science  of  management  involves  a  natural  force,  an  in- 
ductive method  of  study,  and  a  distribution  and  group- 
ing of  activities  according  to  functions. 

One  of  the  great  difficulties  in  getting  business  men 
to  see  that  management  is  anything  more  than  just 
"common  sense,"  is  their  disinclination  to  listen  to  any- 
thing which  smacks  of  theory  or  principles.  They  as- 
sume that  common  sense  deals  with  concrete  things 
while  theory  deals  with  abstractions.  The  truth  is 
that  common  sense  is  not  dissociated  from  theory. 
The  thing  which  people  call  common  sense  is  simply 
the  working  out  of  a  theory  or  principle  thru  con- 
crete things.  When  the  phenomena  are  familiar  and 
when  the  causes  and  effects  are  in  harmony  with  ordi- 
nary experience,  they  are  spoken  of  as  simply  com- 
mon sense.  The  trouble  arises  when  a  man  mis- 
takes the  illustration  of  a  fact  or  principle  for  the 
principle  itself,  and  thinks  he  has  dodged  all  re- 
sponsibility for  thoroness  of  investigation  and  care- 


WHAT  MANAGEMENT  INVOLVES  77 

fulness  in  recording  and  studying  data,  by  calling  the 
whole  thing  simply  a  question  of  common  sense.  To 
the  janitor  the  putting  of  salt  on  an  icy  sidewalk  is 
simply  a  question  of  common  sense ;  to  the  chemist  it 
is  a  question  of  chemical  affinity.  To  the  ordinary 
"boss"  the  following  example  taken  from  Mr.  F.  W. 
Taylor's  experience  will  appeal  only  as  a  common- 
sense  thing  to  do;  to  the  manager  looking  for  truths 
by  which  he  may  guide  his  own  endeavors,  there  will 
appear  the  great  problem  of  the  saving  of  labor 
power,  the  inductive  principle  of  investigation  and  a 
never-ceasing  struggle  to  attain  new  standards  of  ef- 
ficiency— there  being  no  assumption  of  finality  in  the 
derivation  of  laws. 

Mr.  Taylor  was  looking  for  the  law  controlling  the 
efficiency  of  shoveling.  Accordingly,  he  first  selected 
the  type  of  man  who  was  best  adapted  to  the  work. 
He  did  not,  as  he  says,  take  a  trotting  horse  as  his 
standard  to  find  out  what  a  first-class  draft  horse 
should  do  in  hauling  coal.  So  when  he  wanted  to 
study  the  science  of  shoveling  he  selected  two  men  and 
spoke  as  follows : 

You  are  good  shovelers ;  we  want  you  to  work  squarely. 
We  are  going  to  ask  you  to  do  a  lot  of  fool  things,  and  we 
are  going  to  pay  you  double  wages  while  this  investigation  is 
going  on.  It  will  probably  last  two  or  three  months.  This 
man  will  be  over  you  all  day  long  with  a  stop-watch.  He  will 
time  you ;  he  will  count  the  shovel-loads  and  tell  you  what  to 
do.  He  does  not  want  you  to  hurry;  just  go  at  your  ordi- 
nary pace.  But  if  either  of  you  fellows  tries  to  soldier  on  us, 
that  will  be  the  end  of  it ;  we  will  find  you  out  as  sure  as  you 


78      FACTORY  AND  OFFICE  ADMINISTRATION 

are  born,  and  we  will  fire  you  out  of  this  place.  All  we  want 
is  a  square  day's  work ;  no  soldiering.  If  you  don't  want  to 
take  that  job,  don't,  but  if  you  do  we  are  very  glad  to  pay 
you  double  wages  while  you  are  doing  it. 

These  men  took  the  job  and  did  a  fair  day's  work 
thruout  the  period  of  investigation.  Mr.  Taylor  con- 
tinues : 

We  began  by  taking  the  maximum  load  on  the  shovel  and 
counting  the  shovelfuls  all  day  long  and  weighing  the  tonnage 
at  the  end  of  the  day.  I  think  it  was  about  thirty-eight 
pounds  to  the  shovel.  We  found  how  much  those  men  could 
do  when  they  were  shoveling  at  thirty-eight  pounds  to  the 
shovel  on  an  average,  and  then  we  got  shorter  shovels,  holding 
about  thirty-four  pounds,  and  measured  the  tonnage  per  day, 
and  it  was  greater  than  when  they  were  using  the  thirty- 
eight  pound  shovel.  They  shoveled  more  with  the  thirty-four 
pound  shovel-loads  than  with  the  thirty-eight  pound  shovel- 
loads.  Again^we  reduced  the  load  to  thirty  pounds  and  they 
did  a  still  greater  tonnage;  again,  to  twenty-eight  pounds, 
and  another  increase;  and  the  load  kept  on  increasing  as  we 
diminished  the  shovel-load  until  we  reached  about  twenty-one 
pounds,  where  the  man  did  his  biggest  day's  work.  With 
twenty  pounds,  with  eighteen  pounds,  with  seventeen,  and 
with  fourteen,  they  did  again  a  smaller  day's  work.  Starting 
with  a  thirty-eight  pound  shovel,  they  went  higher  and  higher 
until  the  biggest  day's  work  was  done  with  a  twenty-one 
pound  shovel ;  but  when  they  got  the  lighter  shovel  the  load 
went  down  as  the  shovel-load  diminished. 

The  conclusion  reached  from  this  long  experiment 
was  that  the  highest  efficiency  in  shoveling  depends 
upon  supplying  the  workingmen  with  a  shovel  which 
holds  twenty-one  pounds,  no  matter  what  the  material 
may  be. 


WHAT  MANAGEMENT  INVOLVES  79 

9.  Effect  of  a  new  standard. — But  a  standard  es- 
tablished in  one  department  meant  a  change  of  condi- 
tions in  other  departments.  The  principle  of  the  dis- 
tribution of  functions  applies  to  departments  as  well 
as  to  men,  and  upon  a  correct  balancing  of  them  de- 
pends the  success  of  a  management  which  would  avoid 
waste  thru  a  correct  correlation  of  its  productive 
forces.  This  principle  is  well  illustrated  in  the  final 
outcome  of  the  experiments  with  the  shovelers.  First 
the  management  had  to  build  a  shovel-room  for  the 
common  laborers.  Up  to  this  time  the  men  had  owned 
their  own  shovels,  but  now  all  this  was  changed,  for  it 
was-  found  necessary  to  equip  the  shovel-room  with 
eight  or  ten  different  types.  One  shovel,  for  instance, 
would  be  suitable  for  rice  coal;  another  for  a  very 
heavy  ore,  etc.,  but  each  would  carry  just  a  twenty- 
one  pound  load. 

The  establishment  of  a  shovel-room  was  a  simple 
thing  in  itself,  but  it  meant  organization  where  before 
there  had  been  none.  A  good  shovel  is  of  little  use  un- 
less the  right  laborer  has  it  at  the  right  place,  and  in  a 
yard  two  miles  long  and  half  a  mile  wide,  and  employ- 
ing six  hundred  men  doing  all  kinds  of  miscellaneous 
work,  the  arranging  of  a  working  schedule  is  no  small 
task.  This  meant  more  organization  and  a  redistribu- 
tion of  managerial  functions  from  the  foreman's  point 
of  view.  Instead  of  having  the  old-fashioned  fore- 
man, who  walked  around  with  his  men  and  told  them 
what  to  do,  a  large  building  was  erected  for  a  labor  of- 
fice and  three  highly  trained  men  with  their  assistants, 


80     FACTORY  AND  OFFICE  ADMINISTRATION 

planned  the  work  of  the  shovelers  at  least  one  day 
ahead  of  the  work. 

10.  Furnishing  the  men  with  a  teacher. — The  final 
element  in  business  management  also  is  illustrated  by 
the  methods  described  in  the  experiment  which  has 
been  described.  The  teaching  element  is  no  new 
thing  in  management.  It  has  always  been  there,  but 
generally  it  has  been  so  confused  with  other  functions 
that  it  has  been  lost  sight  of  in  these  days  of  big  and 
complex  business  operations.  Every  boss  is  supposed 
to  be  an  instructor,  but  he  uses  his  authority  more 
often  than  his  knowledge  of  the  particular  job  to  keep 
the  laborer  to  his  pace. 

In  some  of  the  more  recent  attempts  to  discover  the 
principles  of  management,  the  function  of  instruction 
has  been  again  emphasized.  This,  also,  is  seen  in  Mr. 
Taylor's  experiments  with  the  shovelers.  Having 
provided  a  physical  organization  for  handling  his  six 
hundred  or  more  men,  he  made  out  a  time-table  show- 
ing just  how  long  it  took  the  men  to  do  each  kind  of 
work.  Then  it  devolved  upon  the  management  to  in- 
form the  men  each  day  just  what  they  had  done  the 
day  before,  and  just  what  they  were  to  do  that  day. 

The  teacher  would  stand  beside  the  man  as  a  friend 
and  show  him  how  to  earn  his  premium.  Or  if  he 
found  men  too  light  for  the  work  the  teacher  would 
recommend  that  the  men  be  transferred  to  a  job  better 
suited  to  their  strength.  Kindly  and  intimate  per- 
sonal study  of  the  workingman  is  the  surest  way  to 
find  the  work  best  suited  for  each  man.  The  instruc- 


WHAT  MANAGEMENT  INVOLVES  81 

tor  coordinates  the  work  of  the  planning  room  with 
the  work  of  the  laborer  and  in  that  way  facilitates  the 
flow  of  productive  force  in  the  business  organization. 

REVIEW 

How  should  an  investigator  of  factory  conditions  go  about  his 
work  if  he  would  be  considered  as  doing  his  work  scientifically? 

What  effect  has  the  growing  tendency  toward  specialization 
had  upon  the  problem  of  management? 

How  can  the  deductive  and  inductive  methods  of  scientific  in- 
vestigation be  adapted  to  factory  and  office  management? 

How  can  the  methods  of  the  teacher  be  introduced  naturally 
into  factory  and  office  management? 


CHAPTER  VIII 

ORGANIZATION  OF  ADMINISTRATION 

1.  Few  principles  but  many  methods. — The  princi- 
ples of  management  hold  true  in  every  kind  and 
branch  of  business.  It  makes  no  difference  whether 
the  business  unit  is  a  billion-dollar  corporation  or  a 
foreman's  department  where  pig-iron  is  handled. 
But  the  methods  of  applying  these  principles  are  as 
varied  as  the  types  of  business  themselves.  There 
is  a  particular  method  most  suitable  for  each  business 
and  each  department.  Businesses,  like  people,  have 
personal  characteristics;  no  two  are  exactly  alike.  If 
every  person  were  to  dress  in  the  most  appropriate 
style,  it  would  be  necessary  to  put  him  in  the  hands 
of  an  expert  and  let  the  latter  study  all  the  points 
of  harmony  so  as  to  dress  the  customer  accordingly. 
In  such  a  case,  ready-made  clothing  would  disappear 
and  valets  and  custom  tailors  would  increase  in  num- 
ber. Such  great  economies  have  been  effected,  how- 
ever, by  the  adoption  of  certain  standardized  units, 
such  as  hat,  coat  and  trousers,  that  a  tailor  or  a  cloth- 
ing house  that  tried  to  eliminate  or  seriously  modify 
these  clothes,  would  soon  go  out  of  business. 

Likewise,  economic  society  has  adopted  certain  busi- 
ness units  for  purposes  of  management.  These  units 
of  management  correspond  roughly  with  a  natural  di- 


ORGANIZATION  OF  ADMINISTRATION        83 

vision  of  the  anatomy  of  business  enterprises.  The 
legal  corporation  and  the  commercial  organization  are 
units  of  management  because  the  anatomy  of  a  busi- 
ness is  naturally  divided  into  a  head  for  ownership  and 
a  body  for  production.  A  style  of  hat  which  obscured 
the  eyesight  would  sacrifice  efficiency  to  vanity.  A. 
method  of  corporate  management  which  neglected  the 
stockholders  would  sacrifice  an  ownership  function  for 
a  selfish  reason  worse  than  vanity.  Now  what  we  wish 
to  show  by  the  comparison  is  this :  Just  as  there  are 
many  styles  of  hats,  so  are  there  many  methods  of 
management;  and  just  as  the  best  hat  is  determined 
by  its  fitness  to  serve  the  purpose  of  a  hat,  so  is 
that  method  of  management  best  which  carries  out 
most  efficiently  the  functions  of  the  department  which 
it  serves.  The  basic  functions  of  a  hat  are  protection 
and  adornment;  the  prime  functions  of  management 
are  control  and  direction.  Methods,  like  styles,  must 
conform  to  the  purposes  for  which  they  were  created. 

2.  Economic  units. — The  economic  unit,  starting 
with  the  family,  at  length  grew  to  include  the  town 
and  finally  embraced  the  nation.  But  as  nations  de- 
velop and  extend  their  territorial  control,  the  lines 
marking  out  the  boundaries  of  the  present  economic 
units  become  more  and  more  arbitrary,  and  only  tend 
to  confuse,  instead  of  to  help,  clear  thinking  on  eco- 
nomic subjects.  This  economic  fiction  is  being  main- 
tained thru  the  necessities  of  political  policies  rather 
than  by  the  demands  of  economic  science. 

The  best  units  in  a  science  of  economics  are  not  de- 


8*     FACTORY  AND  OFFICE  ADMINISTRATION 

termined  by  their  size  or  weight,  etc.,  but  by  the  func- 
tion which  is  performed.  Thus,  we  find  that  the  sci- 
ence of  economics  is  divided  into  the  four  fundamental 
branches  of  production,  distribution,  exchange  and 
consumption.  Each  of  these,  in  turn,  is  divided  into 
units  which  are  classified  according  to  the  function 
which  each  performs;  thus*  production  is  considered 
from  the  points  of  view  of  the  three  units  of  capital, 
labor  and  land.1  Now  each  of  these  units  is  again 
divided  into  other  units ;  hence,  capital  is  spoken  of  as 
fixed  or  circulating,  according  to  the  way  it  performs 
its  function — and  thus  we  may  go  on  subdividing  and 
resubdividing  as  long  as  a  single  shadow  of  difference 
in  performance  of  function  remains. 

It  was  by  such  rigid  analysis  and  classification  that 
economics  was  reduced  to  a  science  of  business  rela- 
tions. It  is  only  when  the  basic  units  have  been  de- 
termined that  true  measurement  or  judgments  can  be 
made  between  the  respective  demands  of  labor  and 
capital.  We  must  know  the  function  of  each  before 
we  can  determine  the  rights  of  each  from  the  social 
point  of  view. 

3.  Industrial  units. — In  the  broad  field  of  economic 
activity  we  distinguish  the  different  industries.  Here 
again  we  search  for  the  unit  of  classification  based  on 
the  function  which  each  industry  performs,  and  we 
find  manufacturing  industries,  transportation  systems, 
banking  or  exchange  houses,  etc.  Each  is  an  in- 

i  The  facts  here  stated  in  general  terms  have  been  more  fully  set  forth 
in  the  Modern  Business  Text  on  "Economics  of  Business." 


ORGANIZATION  OF  ADMINISTRATION        85 

dustry,  in  that  it  uses  the  elements  of  land,  labor  and 
capital  to  effect  different  objects.  These  functions 
are  sufficiently  described  by  the  names  themselves. 

4.  Distinctions  between  economics,  industry  and 
business. — Business,  in  the  narrowest  interpretation 
of  the  word,  is  made  up  of  activities  designed  to  effect 
a  specific  purpose  within  the  field  of  each  industry; 
manufacturing  is  a  broader  term  than  plant;  trans- 
portation than  railroading;  exchange  than  banking. 
Therefore,  if  we  are  to  get  a  clear  understanding  of 
a  business  we  must  discover  the  basic  functions  which 
give  character  to  it,  or  which,  as  we  commonly  say,  de- 
termine the  nature  of  an  enterprise.  This  is  a  some- 
what difficult  matter  under  the  present  confused  con- 
ditions of  thought  concerning  economics,  industry  and 
business.  But,  briefly,  the  differences  are  these: 
Economics  treats  of  land,  labor  and  capital  in  their 
relation  to  human  wants;  the  social  point  of  view  is 
emphasized.  In  industry  these  three  factors  become 
parts  of  systems  or  processes  by  which  society  is  fur- 
nished with  economic  goods.  In  business  these  ele- 
ments are  used  for  the  purpose  of  producing  revenue 
or  dividends. 

Thus  we  see  that  in  economics  the  point  of  view  is 
social.  In  industry  it  is  partly  social  and  partly  pri- 
vate. In  business  the  social  point  of  view  is  com- 
pletely submerged,  and  that  of  private  interest  pre- 
dominates. These  three  points  of  view  are  clearly 
seen  in  the  distinguishing  phrases  of  each  division.  In 
economics  they  are  utility,  value  or  price ;  in  industry 


86     FACTORY  AND  OFFICE  ADMINISTRATION 

they  are  mass  production,  transportation  in  bulk,  or 
syndicating;  in  business  they  are  corporate  control, 
centralization  and  money  profits. 

By  keeping  these  three  points  of  view  in  mind  it  is 
possible  to  see  more  clearly  the  great  political  and  busi- 
ness problems  of  the  nation,  in  so  far  as  they  have  an 
economic  basis.  The  railroad  problem,  the  labor  agi- 
tation, the  tariff  question,  etc.,  all  lie  largely  in  the 
field  of  industrial  organization;  and  the  chief  point 
at  issue  is  to  determine  where  society's  rights  begin 
and  private  privileges  end.  Society,  for  instance,  is 
interested  in  having  the  manufacturers  of  the  nation 
turn  out  a  maximum  of  goods.  The  business  man  is 
not  anxious  primarily  about  the  quantity  of  commodi- 
ties made,  but  about  the  amount  of  money  received  for 
them. 

5.  Managerial  or  business  units. — From  the  man- 
agement point  of  view,  the  corporation  is  a  form  of 
specialization  which  puts  the  function  of  ownership 
and  policy  control  into  the  hands  of  a  management 
different  from  that  which  directs  the  productive  oper- 
ations of  a  business  unit.  The  business  unit  became 
so  large  and  complex  that  it  had  to  be  subdivided  into 
smaller  units  for  purposes  of  management.  The 
corporate  organization,  therefore,  forms  one  manage- 
rial unit,  made  up  of  stockholders,  directors,  commit- 
tees and  officers,  for  the  purpose  of  directing  the  finan- 
cial policy  of  the  business.  The  other  division  which 
it  has  been  found  necessary  to  organize  into  a  man- 
agerial unit  is  the  operative  or  production  end  of  the 


ORGANIZATION  OF  ADMINISTRATION        87 

business.  The  latter  has  come  to  be  further  special- 
ized into  what  may  be  called  a  staff  organization  and 
a  line  organization. 

These  management  units  and  their  relationship  to 
the  general  management  can  best  be  shown  in  the 
form  of  a  diagram,  as  follows : 


PRODUCERS 

CREDIT  MEN 

ACCOUNTANTS 

SALESMEN 


FIGURE  2. — CORPORATE,  STAFF  AND  LINE  OROANIZATIOX. 

An  analysis  of  this  chart  will  show  that:  (1)  the 
corporate  unit  by  virtue  of  its  ownership  reserves  for 
itself  the  right  of  determining  what  shall  be  done  by 
the  general  manager;  (2)  the  staff  organization  unit 


88      FACTORY  AND  OFFICE  ADMINISTRATION 

has  become  a  necessary  part  of  every  large  business, 
for  the  general  manager  cannot  know  how  everything 
can  be  done  in  the  best  way;  (3)  the  line  organization 
gets  its  orders  directly  from  the  general  manager,  who 
is  advised  by  the  corporation  and  staff  experts. 
Altho  the  results  of  the  management  issue  directly 
from  the  line  organization,  yet  the  importance  of  the 
other  units  is  not  to  be  minimized.  The  corporate 
management  is  controlled  by  a  body  of  specialists  who 
devote  their  time  to  the  consideration  of  financial  and 
commercial  policies;  and  the  staff  technical  experts 
concentrate  their  efforts  upon  the  planning  of  methods 
by  which  the  purpose  of  the  owners  may  be  carried  out 
thru  the  line  organization — the  men  who  obey  orders 
and  achieve  results. 

One  important  thing  which  should  not  be  overlooked 
is  the  central  position  occupied  by  the  general  man- 
ager. It  has  been  pointed  out  how  closely  specializa- 
tion must  be  followed  by  a  more  comprehensive 
organization  for  the  purpose  of  developing  cooper- 
ation. With  the  specialization  attendant  upon  the 
development  of  the  corporate  and  operative  units 
of  management,  there  grew  up  an  overwhelming  de- 
mand for  a  coordinating  managerial  element  in  the 
business  unit.  The  general  manager  is  being  forced 
more  and  more  to  assume  this  very  heavy  responsibil- 
ity. It  is  his  function  to  correlate  the  policies  of  the 
corporate  advisers  with  the  methods  of  the  technical 
experts,  and  then  to  harmonize  both  of  these  with  his 


ORGANIZATION  OF  ADMINISTRATION        89 

means  of  production  as  they  are  found  in  the  line 
organization. 

The  details  of  management  are  therefore  being 
forced  upon  three  suborganizations  which,  until  very 
recently,  have  been  given  little  consideration  from  the 
point  of  view  of  management.  As  the  pressure  in- 
creases, the  necessity  of  further  specialization  within 
each  unit  becomes  greater.  Thus  we  see  new  points 
forming,  thru  which  managerial  methods  and  policies 
are  developed  or  directed. 

While  the  complete  treatment  of  corporations  and 
their  organization  is  given  elsewhere  in  the  Modern 
Business  Series,  a  brief  statement  of  their  organiza- 
tion for  management  purposes  is  outlined  here. 

Stockholders 
Directors 

Executive  Committee 

| 

President    Vice-president  General  Manager  Treasurer    Secretary 
FIGURE  3. — ANALYSIS  OF  CORPORATE  ORGANIZATION. 

Corporate  management  begins  with  the  stock- 
holders, who  own  the  business  and  consequently  have 
initiatory  powers.  It  ends  with  the  executive  officer, 
who,  like  the  other  officers  and  the  committees,  de- 
rives his  authority  from  the  board  of  directors,  whose 
members,  in  turn,  look  to  the  stockholders.  The  presi- 
dent or  vice-president  presides  at  all  meetings  of  the 
corporate  organization.  The  treasurer  is  custodian 


90      FACTORY  AND  OFFICE  ADMINISTRATION 

of  the  funds,  which  he  disburses  on  receipt  of 
the  proper  requisitions.  The  secretary  takes  care  of 
all  corporate  correspondence  and  keeps  the  corporate 
records  and  the  seal.  The  general  manager,  who  is 
chosen  by  the  executive  committee,  acts  as  the  medium 
of  contact  for  the  corporate,  staff  and  line  organiza- 
tions. The  corporate  officers  may  or  may  not  be 
members  of  the  staff  or  line  organizations. 

6.  Manager's  cabinet. — The  operation  of  a  plant, 
whether  industrial  or  commercial,  calls  for  the  exer- 
cise of  judgment  upon  many  technical  matters;  ac- 
cordingly, it  has  been  found  necessary  to  aid  the  gen- 
eral manager  by  means  of  an  industrial  cabinet  made 
up  of  experts.     For  many  years  the  manager,  who 
was  also  a  skilled  mechanic,  was  able  to  conduct  the 
operations  of  production  with  marked  success.     This 
was  due  to  the  importance  of  the  part  which  mechan- 
ical equipment  played  in  our  industrial  operations. 
But  at  length  other  factors  in  the  making  of  goods 
became  prominent.     Chemistry  became  as  important 
as  mechanics.     Now  it  is  being  realized  that  the  organ- 
ization of  the  factory,  commercial  house,  bank,  etc., 
must  be  given  special  attention.     If  the  size  of  any 
firm's  business  is  commensurate  with  the  average 
American  enterprise,  few  men  would  consider  them- 
selves capable  of  exercising  the  best  judgment  on  all 
these  different  specialties.    Accordingly,  the  manage- 
ment has  been  strengthened  by  bringing  in  experts 
in  various  lines. 

7.  Progress  due  to  expert  knowledge. — The  history 


ORGANIZATION  OF  ADMINISTRATION        91 

of  the  industrial  development  of  the  various  nations 
shows  that  the  country  which  has  led  the  world  at 
any  particular  period  has  been  one  which  developed 
first  and  most  efficiently  some  one  special  activity  as 
an  aid  to  the  management.  England  was  first  in 
the  field  with  the  use  of  power  machinery.  She  be- 
came the  "work  shop  of  the  world."  America 
adopted  much  of  the  English  technic  but  she  leaped 
to  the  front  industrially  largely  because  of  her  cor- 
porate organization  for  controlling  large  capital 
forces  and  concentrating  them  in  the  exploitation  of 
her  natural  resources.  Recently  the  position  of  both 
England  and  the  United  States  has  been  threatened 
by  the  industrial  technic  of  Germany.  She  has 
brought  industrial  chemistry  to  her  aid  in  the  inter- 
national strife  for  commercial  supremacy. 

The  field  of  specialization  which  is  still  open  for 
development,  is  organization.  Few  factories,  rail- 
roads or  banking  institutions  have  placed  among 
their  technical  experts  a  special  department  for  fur- 
nishing advice  to  the  general  manager  on  productive 
efficiency.  Judging  by  the  widespread  interest  that  is 
being  displayed  at  present,  however,  it  does  not  seem 
likely  that  American  business  men  will  permit  this  im- 
portant function,  management,  to  go  undeveloped. 
Machinery,  chemistry  and  corporate  organization 
have  all  reduced  costs.  The  extension  of  the  organi- 
zation principle  to  the  fields  of  production,  transpor- 
tation, selling,  etc.,  will  have  a  like  effect.  Many 
men  believe  that  the  addition  of  an  organization  ex- 


9£     FACTORY  AND  OFFICE  ADMINISTRATION 

pert  to  the  cabinet  of  the  general  manager  is  impera- 
tive. 

8.  Analysis  of  staff  and  line  organization. — Next 
to  the  corporate  organization  stand  the  staff  and  line 
organizations  as  units  in  management.  The  follow- 
ing chart  (Fig.  4)  shows  the  position  of  various  ex- 


MANAGER  .MANAGER 

FINANCIAL  SALES 

OEP'T  DEP'T 


MANAGER       MANAGER 

PRODUCTION     ACCOUNTING. 

DEP'T         DEB'T 


FIGTTBE  4. — STAFF  AND  LINE  ORGANIZATION. 

perts  and  their  relation  to  that  of  the  general  man- 
ager; and  also  how  these  numerous  activities  may  be 
further  subdivided  into  smaller  units  for  purposes  of 
more  specialized  administration. 

The  various  specialists  belonging  to  the  staff  or- 
ganization may  be  permanently  or  temporarily  re- 
tained. In  either  case  their  position  holds  such  a 
relationship  to  the  manager's  that  they  are  not  gen- 


ORGANIZATION  OF  ADMINISTRATION         93 

erally  considered  employes.  The  feeling  is  gradually 
growing  that  these  men  should  hold  the  same  relation- 
ship to  the  general  manager  that  a  lawyer  holds  to  his 
client.  The  lawyer  looks  into  the  details  of  each  case 
and  reports  to  the  client.  The  latter  accepts  his  law- 
yer's advice  or  rejects  it,  as  he  thinks  best.  By  re- 
ferring the  investigation  and  solution  of  the  details 
to  competent  specialists,  the  manager  is  left  free  to 
assimilate  their  plans  properly  and  to  correlate  the 
activities  which  follow  from  their  advice. 

When  we  come  to  the  line  experts,  the  men  who  are 
to  carry  out  the  orders  of  the  general  manager,  we 
are  on  familiar  ground.  These  departments  have 
been  closely  connected  with  the  management  for  many 
years.  As  the  duties  of  the  general  manager  have 
grown  it  has  become  necessary  to  depend  more 
and  more  upon  the  managers  of  departments  to  look 
after  the  details.  Some  confusion  has  arisen  as  a 
result  of  this  dependence  upon  the  departmental  man- 
agers. The  latter  in  many  cases  have  absorbed  the 
functions  of  the  staff  specialists.  They  not  only  have 
become  the  executors  of  the  work  but  also  act  as  spe- 
cial advisers  in  the  planning.  If,  however,  the  func- 
tions of  their  departments  are  kept  clearly  in  mind, 
it  will  be  seen  that  their  activities  should  be  confined 
to  the  carrying  out  of  orders  given  them  by  the  general 
manager.  This  division  of  function  may  not  always 
be  necessary  or  possible  in  small  plants,  but  the  con- 
sideration of  management  from  the  point  of  view  of 
the  units  for  carrying  out  the  functions  of  -manage- 

IV— 8 


94     FACTORY  AND  OFFICE  ADMINISTRATION 

ment  requires  such  a  division.  It  affords  not  only  a 
clear  comprehension  of  the  problems  of  management, 
but  also  indicates  a  modern  tendency  to  relieve  the 
general  manager  of  as  many  details  as  possible  so  that 
he  may  be  ready  to  meet  every  emergency.  The  de- 
tails of  the  administration  are,  therefore,  left  in  the 
hands  of  the  manager  of  production,  the  manager  of 
sales,  the  manager  of  finance  and  the  manager  of  ac- 
counting. 

9.  Financial  department  as  a  unit. — The  manager 
of  the  financial  arrangements  in  connection  with  the 
operative  departments  may  have  control  of  the  cash, 
credits  and  collections.  He  may  also  act  as  inspector 
of  all  subordinate  financial  offices.  But  the  financial 
operations  of  a  business  go  beyond  these  matters. 
The  financial  specialist  in  large  concerns  handles  such 
things  as  the  marketing  of  securities.  The  position  of 
the  financial  manager,  when  his  functions  are  fully 
differentiated,  would  appear  as  in  the  following  chart : 


Financial  Manager 

Credit  Man 
Assistants 

Collector 
Assistants 

Cashier            Inspi 
Assistants         Assis 

FIGURE  5. — ANALYSIS  OF  FINANCIAL  DEPARTMENT. 

10.  Sales  department  as  a  unit. — The  importance 
attaching  to  the  marketing  of  goods  has  generally  been 
recognized,  but  the  peculiar  conditions  surrounding 
American  markets  have,  until  recently,  made  the  sell- 
ing of  goods  a  comparatively  simple  matter.  To  get 


ORGANIZATION  OF  ADMINISTRATION         95 

salesmen  with  a  "good  front"  or  a  "personality" 
seemed  formerly  to  be  the  chief  problem  in  sales  man- 
agement. Today  this  is  all  changed.  It  is  stated  on 
good  authority  that  30  per  cent  of  the  organization  of 
the  merchandising  departments  of  the  country  under 
present  management  is  unnecessary,  and  therefore  an 
added  burden  of  expense.  The  manager  of  a  sales 
department  must  plan  his  selling  campaigns  with  the 
thoroness  of  an  army  general.  To  the  sales  manager 
are  referred  all  plans  for  the  getting  of  new  business, 
the  problems  of  selling,  competition,  the  making  of 
sales  contracts,  the  reporting  of  sales  data  and  the  in- 
spection of  sales  agencies.  The  following  chart  shows 
the  units  that  make  up  the  sales  department. 

Sales  Manager 

I 


Advertising  Agent          Division  Sales  Agents  Inspector 

Assistants  Salesmen  Assistants 

FIOUBE  6. — ANALYSIS  OF  SALES  DEPARTMENT. 

11.  Accounting  department  as  a  unit. — The  man- 
ager of  the  accounting  department  has  charge  of  all 
raw  material,  worked  material  and  supplies.  He 
likewise  has  charge  of  the  inoperative  plant  and  equip- 
ment and  of  all  finished  product.  He  investigates 
claims  and  procures,  compiles  and  distributes  all 
necessary  records  of  conversion  and  operation.  This 
department  is  responsible  for  the  inspection  of  all 
records.  An  analysis  of  the  accounting  department 
follows. 


FACTORY  AND  OFFICE  ADMINISTRATION 


Manager  of  Accounts 

I 


Head  Accountant  Auditor 

I  I  Helpers 

Commercial  Bookkeeper        Cost  Bookkeeper 


Receiving  Shipping    Billing  Storekeeper  Timekeeper  Stockkeeper 

Clerk        Clerk        Clerk  I                          I                          I 

|                 |                |  Helpers  Helpers  Helpers 
Helpers    Helpers     Helpers 

FIGURE  7. — ANALYSIS  OF  ACCOUNTING  DEPARTMENT. 

12.  Production  department  as  a  unit. — Classifying 
the  functions  which  belong  to  the  production  depart- 
ment and  the  sub-classification  into  still  smaller 
units  has  constituted  the  chief  activity  of  the  modern 
efficiency  engineer.  According  to  him  a  redistribu- 
tion of  these  functions  is  very  necessary,  but  without 
going  into  the  discussion  at  present  let  us  see  what 
natural  divisions  we  should  find  under  any  system  of 
management.  The  following  chart  (Fig.  8)  will 
show  that  the  manager  of  production  should  have 
charge  of,  and  jurisdiction  over,  the  plant  and  equip- 
ment, and  the  purchase  of  material,  supplies  and 
labor.  He  will  also  supervise  the  inspection  of  pur- 
chases and  output. 

Manager  of  Production 


Purchasing 

Superintendent 

Inspector 

Agent 

| 

| 

| 

Foremen 

Assistants 

Assistants 

| 

Various  Bosses 

Workers 

FIGURE  8. — 'ANALYSIS  OF  PRODUCTION  DEPARTMENT. 


ORGANIZATION  OF  ADMINISTRATION        97 

13.  Management  units  the  basis  of  organization 
charts. — It  has  been  said  that  99  per  cent  of  the  enter- 
prises now  in  existence  have  no  such  thing  as  a  chart 
or  diagram  showing  the  essential  units  of  which  their 
organization  is  composed.  Probably  50  per  cent  of 
the  managers  never  heard  of  such  a  thing.  No  doubt, 
managers  are  not  generally  aware  of  the  aid  which 
such  a  chart  would  be  to  them.  First,  it  throws  into 
bold  relief  the  whole  organization ;  secondly,  it  shows, 
in  a  form  that  can  be  visualized,  the  weak  or  unde- 
veloped parts  of  the  management. 

An  organization  that  cannot  be  charted  so  as  to 
show  the  well-defined  relationships  cannot  be  said  to 
be  scientifically  managed.  Mr.  H.  F.  J.  Porter  has 
said: 

Management  is  like  a  coaching  outfit.  The  coach  must  be 
built  right  before  its  service  is  at  its  best.  All  its  four  wheels 
must  be  of  the  correct  size  and  its  body  of  correct  propor- 
tions. The  horses  must  be  well-matched  and  strong  enough 
to  pull  the  coach.  One  must  not  be  a  dray-horse  and  another 
a  trotter.  The  harness  must  be  properly  suited  to  the  horses 
so  that  the  collars  will  not  chafe  and  irritate  them  and  the 
traces  must  be  of  the  s-ame  length,  so  as  to  pull  evenly  and 
not  permit  one  horse  to  get  his  legs  over  the  other  horse's 
trace  and  interfere  with  him.  If  all  these  requirements  are 
not  met,  there  will  be  danger  of  not  running  straight. 
Merely  speaking  kindly  to  the  horses,  or  patting  them  on  the 
neck,  or  giving  them  sugar,  or  plying  the  whip,  is  not  going 
to  reach  the  cause  of  the  trouble.  But  when  this  organiza- 
tion is  properly  arranged  so  that  everything  is  in  its  right 
place,  without  overlapping  or  interfering,  it  is  ready  for  the 
skilled  coachman  to  get  up  into  the  box,  take  the  reins  and 
drive  the  coach  over  such  roads  as  he  may  meet.  There  is 


98     FACTORY  AND  OFFICE  ADMINISTRATION 

some  assurance  that  it  will  stay  in  the  middle  of  the  road  with- 
out any  inherent  tendency  to  go  over  into  the  ditch  on  either 
side.  The  man  on  the  box  is  the  manager,  and  upon  his  gen- 
eral knowledge  of  conditions  and  his  skill  in  handling  the 
organization  will  depend  the  efficiency  of  the  organization. 
This  man  is  an  entirely  different  one,  however,  from  the  one 
who  designed  the  coach  or  the  harness,  altho  he  should  have 
very  much  to  say  about  the  selection  of  the  horses. 

Without  going  into  the  details  of  organization 
which  this  analogy  suggests,  it  will  be  sufficient  for 
present  purposes  to  note  that,  generally  speaking, 
any  organization  has  four  basic  departments,  which 
may  be  compared  to  the  four  horses  drawing  the 
coach.  They  are  the  financial,  the  sales,  the  produc- 
tion and  the  record  departments.  Each  of  these 
should  be  as  independent  in  its  action  as  any  one  of 
the  horses,  but  all  should  be  so  thoroly  related  by  their 
harness  as  to  constitute  a  uniform  and  united  force  in 
pulling  the  business.  In  other  words,  these  units  of 
management  should  remain  distinct,  but  their  efforts 
should  be  so  coordinated  as  to  bring  about  a  unified 
result. 

14.  Duties  of  the  management  units. — The  duties 
of  the  corporate  management,  as  we  have  seen,  are 
(1)  to  furnish  funds  and  (2)  to  determine  the  gen- 
eral commercial  policy  of  the  business  enterprise. 
The  second  group  of  duties  becomes  a  unit  which 
carries  on  the  productive  functions;  this  in  turn 
is  divided  into  the  staff  organization — the  chief  duty 
of  which  is  the  advising  of  the  general  manager 
upon  various  technical  matters — and  the  operating 


ORGANIZATION  OF  ADMINISTRATION        99 

unit,  which  is  generally  called  the  line  organization. 
The  operating  unit  is  the  one  in  which  we  are  at 
present  peculiarly  interested.  This  unit,  as  we  found, 
was  divided  for  purposes  of  more  efficient  manage- 
ment into  four  basic  departments.  The  duty  of  the 
first  of  these  departments  is  to  collect  and  disburse  the 
money.  The  duty  of  the  sales  department  is  to  ob- 
tain orders  for  work  by  which  the  third  or  production 
department  is  kept  going.  The  third  department 
then  converts  into  finished  goods  the  orders  which  it 
has  received.  It  will  be  noticed  at  once  how  de- 
pendent this  department  is  upon  the  first  and  second 
departments  for  equipment,  and  then  in  turn  how 
dependent  these  departments  are  upon  the  production 
department.  If  maladjustment  is  to  be  avoided, 
these  departments  must  be  equally  balanced  and 
normally  independent.  This  requirement  leads  us  to 
the  fourth  or  record  department,  which  is  intended  to 
keep  account  of  all  that  happens  in  the  other  depart- 
ments and  thus  maintain  an  operative  balance.  It 
provides  records  for  the  receipt  of  all  raw  material, 
holding  it  back  until  it  is  needed  by  the  production  de- 
partment, keeping  track  of  what  the  latter  does  with 
it,  taking  it  back  as  finished  products,  handing  it  over 
to  the  sales  department  and  telling  the  financial  de- 
partment how  much  it  has  already  cost,  how  much 
more  it  will  cost  before  it  is  sold,  and  how  much  should 
be  added  for  profit  in  order  that  all  the  departments 
may  be  kept  in  good  condition  continually. 


100     FACTORY  AND  OFFICE  ADMINISTRATION 

REVIEW 

How  do  you  distinguish  between  a  plan  of  management  and  a 
system  ? 

Point  out  the  difference  in  the  points  of  view  which  each  of  the 
following  presents:  economics,  industry  and  business. 

Under  the  designations  of  staff  and  line  organizations,  point 
out  the  chief  elements  which  distinguish  each. 

Why  have  managers  added  a  cabinet  of  experts  to  their  staffs  ? 
What  effect  has  expert  management  of  financial  matters  had  upon 
American  industrial  progress? 

What  argument  can  be  advanced  in  favor  of  a  manager's  adding 
an  expert  production  man  to  his  staff  who  will  hold  the  same 
relation  to  the  company  that  the  corporation  lawyer  does? 

Outline  the  various  functions,  in  the  form  of  a  chart,  which 
will  show  in  skeleton  form  the  administrative  organization  of  a 
typical  factory. 


CHAPTER  IX 

TYPES  OF  MANAGEMENT— THE  FACTORY 

1.  Thin  red  line  of  tape. — A  recent  report  issued 
by  the  Parliament  of  the  Commonwealth  of  Aus- 
tralia, on  Business  Management  of  the  Department  of 
Home  Affairs,  gives  the  following  account  of  govern- 
mental red  tape:  A  school  teacher  in  the  Federal 
Territory  of  New  South  Wales  wants  a  minor  repair 
in  a  school  closet.  He  writes  thru  the  local  inspector 
to  the  Department  in  Sydney,  and  the  Minister  ad- 
dresses the  Premier  of  New  South  Wales,  who 
gravely  addresses  a  letter  to  the  Right  Honorable,  the 
Prime  Minister  of  the  Commonwealth,  informing  him 
that  the  woodwork  of  a  closet  is  in  a  state  of  decay 
owing  to  the  ravages  of  white  ants,  begging  him  to 
bring  the  matter  to  the  notice  of  his  colleague,  the 
Minister  of  Home  Affairs,  with  a  view  to  the  Admin- 
istrator of  the  Federal  Territory  being  instructed  to 
have  the  closet  mended,  and  concluding  by  having  the 
"honour  to  be  his  obedient  servant."  The  Prime 
Minister  does  as  desired,  and  ultimately  the  work  is 
put  in  hand.  When  the  work  is  done,  a  notification 
is  sent  back  by  the  same  tortuous  course.  "Famil- 
iarity," says  Mr.  Me  C.  Anderson,  the  investigator, 

"does  not  seem  to  lessen  the  shock  one  gets  at  the  ex- 
101 


102     FACTORY  AND  OFFICE  ADMINISTRATION 

ceedingly  long  journey  a  very  small  matter  has  to  take 
before  it  can  be  remedied." 

National  governments  all  over  the  world  have  in- 
creased their  activities  year  by  year  until  the  adminis- 
trative machinery  threatens  to  crush  its  foundation. 
There  is  no  necessity  that  the  efficiency  of  government 
management  be  measured  by  the  business  standard — 
that  the  value  of  the  product  exceed  the  cost.  The 
"system  specialists"  can  work  year  after  year  without 
a  check.  Should  they  be  compelled  to  study  other 
factors,  such  as  the  necessity  of  raising  money  on  a 
four  per  cent  basis,  or  the  problem  of  "stock  turnover," 
governmental  departments  would  purge  themselves 
automatically  of  "figures  not  worth  while."  To  show 
what  red  tape  means  in  government  practice  would 
hardly  be  worth  while,  did  not  a  somewhat  similar  con- 
dition prevail  in  nearly  every  large  business  organi- 
zation. The  introduction  of  improved  methods  en- 
counters the  universal  aversion  of  business  men  to 
any  increase  in  general  overhead  or  office  expense, 
which  is  fundamentally,  tho  not  always  consciously, 
based  on  a  feeling  of  helplessness  in  regard  to  the  con- 
trol of  those  parts  of  an  organization  which  cannot 
be  checked  by  the  "results"  standard.  There  is  no 
spirit  of  "business  is  business"  to  hold  the  system  in 
the  office  to  a  definite  end  without  meaningless  ex- 
cursions. The  costs  of  operation  of  the  department 
are  covered  by  the  general  prosperity  of  the  whole, 
and  the  only  way  the  average  business  man  knows  of 


'FACTORY  MANAGEMENT  103 

handling  them  is  to  "play  safe"  and  oppose  organiza- 
tion expenses  on  general  principles. 

2.  Need  of  clear  understanding  of  organization, 
types. — The  idea  that  organization  means  red  tape, 
and  that  red  tape  means  more  overhead  expense,  has 
done  much  to  retard  the  general  movement  for  more 
efficient  management.  Yet  a  very  little  thought  ap- 
plied along  the  right  lines  would  show  that  red  tape  is 
only  an  exaggerated  form  of  one  feature  in  organiza- 
tion, and  that  it  generally  disappears  as  soon  as  real 
organization  is  introduced. 

Let  there  be,  then,  a  definite  statement  at  the  out- 
set: 

(a)  No  organization  can  take  the  place  of  business 
judgment,  for  organization  is  but  a  means  to  an  end; 
it  provides  a  method. 

(b)  The  guiding  questions  in  selecting  a  type  of 
organization  are :     Does  it  permit  the  choosing  of  the 
things  worth  doing?     Does  it  emphasize  the  factors 
that  have  the  greatest  bearing  on  the  results,  and  per- 
mit the  casting  out  of  the  unessential  and  insignificant 
factors? 

(c)  Organization  as  a  system  should  (1)  relieve  the 
administration  judgment  of  details,  and  yet  bring  to 
it  the  essentials  necessary  for  correct  premises,  and 
(2)  provide  an  orderly  procedure  for  the  carrying  out 
of  executive  decisions  when  they  are  put  into  opera- 
tion. 

(d)  The  following  factors,  which  make  organiza- 


104     FACTORY  AND  OFFICE  ADMINISTRATION 

tion,  should  be  considered  in  the  adaptation  of  the  or- 
ganization type  to  the  character  of  one's  business : 

( 1 )  Structure :  lines  of  authority,  responsibility,  di- 
vision of  labor,  system,  discipline. 

(2)  Records:  accounting,  statistics,  instruction. 

(3)  Esprit  de  corps:  cooperation,  team  work. 

(e)  The  managing  principle  by  which  every  organ- 
ization should  be  controlled  is  the  determination  of  the 
relative  importance  played  by  each  of  these  factors; 
since  this  is  influenced  by  purpose,  conditions  and  ma- 
terial, no  two  administrative  policies  would  follow  ex- 
actly the  same  course. 

(f )  The  name  or  designation  of  a  type  of  manage- 
ment depends  upon  the  element   (see  d)  which  re- 
ceives the  greatest  emphasis.     Hence,  (1)  if  lines  of 
authority  are  emphasized  in  one  way,  the  organization 
in  which  this  occurs  is  called  a  "military  type";  (2)  if 
lines  of  authority  are  emphasized  in  another  way,  in- 
volving the  division  of  labor,  especially  as  applied  to 
administrative  functions,  the  organization  is  spoken  of 
as  a  "staff"  or  "functional  type";  (3)  if  system— ac- 
counting and  other  facilitating  activities — is  well-or- 
ganized, then  the  type  is  known  as  a  "systematized 
type" ;  if  this  feature  is  lacking,  a  general  weakness  of 
discipline  prevails,  and  the  organization  is  classed  as 
unsystematized;  (4)  if  a  serious  attempt  is  made  to 
increase  the  esprit  de  corps  thru  committee  work,  then 
we  have  a  type  known  as  the  "committee"  form  of 
management. 

3.  Several  differences  between  types. — Just  what 


FACTORY  MANAGEMENT  105 

distinction  is  to  be  emphasized  in  the  classification  of 
staff  and  military  types  of  management  is  not  always 
made  clear.  The  military  organizations  of  today  un- 
doubtedly employ  staff  methods  and  have  developed 
them  to  a  high  degree  of  efficiency.  The  contrast 
which  most  writers  have  in  mind  when  comparing 
the  staff  with  the  military  type  seems  to  be  the  method 
of  exercising  control  of  the  business,  or  the  execution 
of  orders  and  commands.  The  military  type  suggests 
a  domineering  attitude,  an  autocratic  method  and  pro- 
motion by  seniority.  The  staff  implies  specialized 
knowledge,  conferences  and  advancement  thru  proved 
fitness.  The  military  type  is  usually  described  as  a 
one-man  power  having  for  its  ruler  a  despot  who  de- 
termines his  actions  by  the  standards  of  inherited  in- 
formation, and  who  manages  his  business  by  rule- 
of -thumb  methods.  The  staff  type  is  pictured  as  be- 
ing just  the  reverse  of  this.  Here  the  manager  is  su- 
preme in  command,  but  he  is  advised  at  every  step  by 
experts  whose  information  upon  their  specialties  is 
the  very  latest  that  can  be  found.  Neither  snap  judg- 
ments nor  empiricism  is  in  control. 

4.  Why  type  distinctions  grew  up. — Since  there  is 
so  much  discussion  on  the  subject  today  it  may  be 
well  to  state  the  case  somewhat  more  at  length  than  the 
importance  of  the  distinction  between  the  military  and 
the  staff  types  warrants.  The  distinction  has  grown 
up  largely  thru  the  attacks  of  industrial  engineers 
upon  the  present  system  of  industrial  organization. 
They  found  most  of  the  industrial  plants  of  the 


106     FACTORY  AND  OFFICE  ADMINISTRATION 

country  poorly  managed  because  in  most  cases  one 
man  was  trying  to  do  everything.  The  manager, 
finding  his  powers  limited  in  time  and  space,  put  much 
responsibility  upon  the  superintendents.  These,  in 
turn,  forced  the  work  of  carrying  out  orders  upon  the 
foremen.  The  latter,  becoming  overburdened,  were 
compelled  to  rely  more  and  more  upon  the  judgment 
and  initiative  of  the  workmen.  This  system  brought 
the  burden  of  the  work  and  responsibility  upon  the 
very  men  who  were  least  able  to  bear  it.  Disorgani- 
zation and  great  waste  were  the  results.  Since  the 
manager  with  his  superintendents,  foremen,  etc.,  sug- 
gested the  army  organization,  the  name  military  was 
attached  to  it.  This  military  form  became  associated 
with  poor  management  and  extravagant  waste  in  pro- 
duction. Then  came  the  discovery  that  some  con- 
cerns had  increased  their  efficiency  by  hiring  expert 
chemists,  draftsmen,  students  of  labor  questions, 
etc.  This  at  once  suggested  the  staff  organization. 
The  system  was  then  developed  so  as  to  put  most  of 
the  important  functions  of  management  under  the 
guidance  of  a  body  of  specialists.  A  business,  there- 
fore, which  had  such  an  addition  to  its  managerial 
equipment  was  spoken  of  as  being  organized  on  the 
staff  principle. 

5.  Staff  and  line  in  business. — One  firm  which  uses 
the  distinction  between  staff  and  line  officers  is  the 
Sherwin-Williams  Paint  Company.  The  principal 
office  experts,  such  as  Chief  of  Motor  Power  or  Var- 
nish Sales  Department  Manager,  without  having  ex- 


FACTORY  MANAGEMENT  107 

ecutive  control,  confine  their  attention  to  the  working 
out  of  the  best  methods  and  the  adoption  of  the  best 
standards.  The  control  is  with  the  line  or  territorial 
managers.  The  company  holds  that  the  technical 
man  is  doing  his  best  work  when  he  is  showing  another 
man  how  to  do  it.  The  specialist  is  particularly 
needed  during  the  period  when  construction  and  in- 
stallation are  taking  place.  The  salesmen  in  the  field 
should  be  instructed  so  that  they  may  meet  ordinary 
business  contingencies. 

6.  Functional  type,  the  factory. — Under  the  older 
forms  of  management  much  depends  upon  the  fore- 
man's ability  to  grasp  the  larger  problems  of  the  man- 
ager's policy.  In  arranging  for  the  work  of  the  fore- 
man, it  has  been  determined  of  late  that  the  same  pro- 
cess shall  be  adopted  in  developing  efficient  specialists 
here  as  was  done  in  the  case  of  the  common  laborer. 
Each  foreman,  instead  of  having  charge  of  a  number 
of  men  performing  many  kinds  of  work,  has  now  one 
thing  to  do.  This  was  found  necessary  because  cap- 
able foremen  with  broader  ability  were  difficult  to 
find.  Such  general  work  demands  of  a  foreman  that 
he  have  a  fair  quota  of  brains,  some  general  educa- 
tion, fair  physical  health,  some  technical  knowledge 
and  some  manual  dexterity.  In  common  with  all  ad- 
ministrative positions,  his  position  calls  for  tact  and 
judgment.  He  must  have  a  knowledge  of  every  part 
of  the  product;  he  must  see  that  the  workmen  use 
their  time  for  the  best  interests  of  the  company.  He 
must  be  a  "hustler"  himself  and  he  must  know  how 


108     FACTORY  AND  OFFICE  ADMINISTRATION 

fast  other  men  can  work.  His  duties  include  the  dis- 
ciplining of  the  man,  the  settling  of  disputes  between 
employes,  and  the  adjusting  of  wages  in  case  of  ab- 
sence, sickness  and  so  on. 

7.  Functional  method  of  organization. — The  diffi- 
culty of  getting  men  of  the  proper  caliber  to  take 
charge  of  the  departments  has  set  managers  to  devis- 
ing a  method  or  organization  which  calls  for  less  abil- 
ity in  any  one  foreman.  Accordingly  the  functional 
method  of  organization  is  gradually  supplanting  the 
military  method.  In  an  organization  of  this  kind,  a 
man  possessing  three  or  four  of  the  above  qualifi- 
cations can  be  trained  to  fill  the  position  of  a  func- 
tional foreman.  He  is  required  generally  to  do  only 
two  or  three  things,  and  in  the  larger  shops  only  one 
thing.  This  does  not  mean  that  the  same  amount  of 
ability,  taking  the  shop  as  a  whole,  is  not  needed  under 
the  functional  plan,  but  that  it  is  organized  differ- 
ently. All  the  ability  which  is  needed  for  planning  is 
concentrated  in  a  planning  department.  The  shop 
foremen  are  no  longer  expected  to  do  this  planning. 
In  a  fairly  large  factory  there  will  be  four  foremen  in 
the  planning  department,  and  another  set  of  four  fore- 
men will  be  constantly  upon  the  floor  of  the  shop,  in- 
structing and  helping  the  men.  This  division  of  labor 
causes  no  confusion,  for  the  workmen  never  see  the 
foremen  in  the  planning  department.  This  illustrates 
how  all  the  functions  may  be  separated  and,  whereas 
the  old  system  provided  one  foreman  from  whom  a 
group  of  men  took  their  orders,  the  newer  method  per- 


FACTORY  MANAGEMENT  109 

mits  any  workman  to  have  as  many  as  eight  bosses. 

8.  Foremen  of  the  planning  department  and  the 
shop. — The  foremen  in  the  planning  department  are 
(1)  the  route  clerk,  (2)  the  instruction-card  man,  (3) 
the  cost  clerk,    (4)   the  time  clerk.     The  duties  of 
these  men  are  fully  treated  in  Chapter  XII  on  plan- 
ning in  the  factory.     In  the  shop  there  are  (1)  the 
gang  boss,  (2)  the  speed  boss,  (3)  the  inspector,  (4) 
the  disciplinarian.    These  men  can  be  selected  without 
difficulty,  and  their  training  can  be  provided  for  if  the 
manager  has  a  clear  idea  of  what  he  wants  to  accom- 
plish. 

The  gang  boss  has  no  definite  duties  as  such.  He 
simply  carries  out  such  work  as  the  planning  depart- 
ment assigns  him. 

The  speed  boss  sees  that  the  work  is  carried  out  ac- 
cording to  the  schedule  sent  out  by  the  planning  room. 

The  inspector  looks  after  the  quality  of  the  work  as 
it  comes  from  the  machines.  He  must  be  able  to  in- 
struct the  men  as  to  the  type  and  quality  of  workman- 
ship required. 

The  disciplinarian  settles  all  cases  of  insubordina- 
tion, and  passes  judgment  upon  the  disputes  which 
arise  between  workmen  and  foremen. 

There  is  a  fifth  boss  in  some  factories,  whose  duty 
it  is  to  keep  the  machines  clean  and  in  repair. 

9.  Unsystematized  type  of  management. — In  an 
unsystematized  plant  the  chief  characteristic  of  the 
management  is  the  lack  of  a  proper  system  of  cost  ac- 
counts, and  an  inadequate  method  of  keeping  the  ac- 

IV — 9 


110     FACTORY  AND  OFFICE  ADMINISTRATION 

counting  information  in  good  shape.  In  so  far  as 
every  management  must  depend  upon  its  cost  and 
financial  records  in  order  to  meet  market  competition, 
the  unsystematized  plant  is  at  a  distinct  disadvantage. 
Inadequate  cost  records  are  the  cause  of  many  losses 
and  failures.  It  is  a  frequent  experience  of  certified 
public  accountants,  on  being  called  in  to  examine 
books  of  account,  to  find  that  the  firm  is  losing  money. 

When  a  competitor  discovers  the  fact  that  his  rival 
is  not  keeping  close  account  of  costs,  he  is  some- 
times able  to  purchase  the  goods  more  cheaply  from 
the  firm  which  keeps  inaccurate  cost  accounts  than  to 
make  them  himself.  It  is  said  that  a  large  depart- 
ment store  which  had  for  years  done  its  own  printing, 
finally  ceased  this  branch  of  work  because  it  discov- 
ered that  the  printing  trade  in  general  kept  very  in- 
adequate records  of  its  costs.  It  then  adopted  the 
method  of  sending  for  estimates  to  a  large  number  of 
printers  whenever  it  had  a  job  which  it  wished  to  give 
out.  All  of  these  estimates  were  to  be  based  upon 
a  printed  sample  which  the  store  sent  to  the  various 
printers.  The  manager  was  safe  in  choosing  the  low- 
est bid  submitted,  for  without  fail  some  of  the  bids 
would  be  below  cost. 

Under  the  unsystematized  type  of  management  the 
accounting  generally  consists  of  a  statement  prepared 
some  time  after  the  annual  or  semi-annual  stock-tak- 
ing, and  shows  the  profit  and  loss,  and  the  assets  and 
liabilities.  In  most  cases,  however,  such  a  record  is 
chiefly  of  historical  importance.  If  the  statement  is 


FACTORY  MANAGEMENT  111 

bad,  it  is  too  late  to  remedy  the  troubles  of  the  previ- 
ous year,  because  it  shows  merely  the  result  of  that 
year.  If,  as  is  likely  to  happen  where  there  is  little 
system,  the  yearly  statement  is  delayed,  the  record  be- 
comes too  ancient  to  be  of  much  use.  It  frequently 
happens  that  firms  whose  fiscal  year  ends  in  January 
do  not  know  the  result  of  their  year's  business  until  six 
months  later,  and  then  only  in  the  form  of  statements 
as  to  profit  and  loss  and  assets  and  liabilities.  Some 
of  the  information  is  eighteen  months  old  and  it  all 
comes  too  late  to  stop  any  of  the  leaks. 

10.  Majority  of  industries  unsystematized. — It  is 
probably  safe  to  say  that  the  great  majority  of  the 
firms  of  this  country  belong  to  the  unsystematized 
type  of  management.     The  prevalence  of  this  type  in 
America  is  due  in  a  great  measure  to  the  large  margin 
which  has  existed  between  the  cost  of  production  and 
the  selling  price.     Many  firms  with  a  large  margin 
of  profit  have  paid  little  attention  to  scientific  ac- 
counting; but  conditions  in  this  respect  are  changing 
and  the  number  of  systematized  concerns  is  growing 
every  day. 

11.  Systematized  type  of  management. — Under  the 
systematized  type,  the  managers  are  methodical  and 
systematic ;  each  department  has  been  studied  and  sys- 
tematized until,  so  far  as  records  go,  the  firm  knows 
exactly  where  it  stands  at  all  times. 

The  distinction  between  the  systematized  type  of 
management  and  the  unsystematized  is  seen  in  the  dif- 
ferent emphasis  which  is  put  upon  the  accounting. 


112     FACTORY  AND  OFFICE  ADMINISTRATION 

Instead  of  vague  reports  made  once  or  twice  a  year, 
the  books  of  the  systematic  type  of  management  show 
the  conditions  of  the  business  quarterly  or  monthly, 
and  in  much  detail.  Four  new  features  usually  ap- 
pear under  this  form  of  management:  1.  Reports 
comparing  last  year's  cost  with  this  year's  costs. 
These  may  be  made  on  the  basis  of  a  department  or 
of  a  certain  product.  2.  There  will  be  costs,  showing 
material  and  labor  value.  3.  In  addition  to  the  deter- 
mination of  these  direct  costs,  there  will  also  appear  a 
practical  method  whereby  overhead  charges  may  be 
equitably  distributed.  4.  The  results  of  the  business 
will  be  periodically  put  before  the  manager  in  a  simple 
but  comprehensive  table  or  chart. 

12.  Cost  records  highly  developed. — The  cost  rec- 
ords give  systematized  management  a  distinct  advan- 
tage over  the  unsystematized  types.  Correct  cost  ac- 
counts are  relied  upon  to  establish  the  selling  price, 
and  to  point  out  excessive  costs  and  indicate,  perhaps, 
where  they  may  be  reduced.  Many  managers,  there- 
fore, believe  that  when  they  have  a  systematized  plant 
they  have  also  an  efficient  plant.  It  is  just  at  this 
point  that  the  advocates  of  the  new  scientific  manage- 
ment take  issue  with  them.  They  point  out  that  sys- 
tem helps  only  one  function  of  management  and  that 
even  under  the  best  systematized  methods  many  de- 
fects might  be  discovered  pertaining  to  the  system  it- 
self which  would  be  eliminated  under  the  efficiency  or 
scientific  type  of  management.  These  critics  point 
out,  for  example,  that  the  same  general  system  of  ac- 


FACTORY  MANAGEMENT  113 

counting  under  the  systematized  type  does  not  extend 
to  the  whole  plant.  To  illustrate,  the  clerical  work  in 
the  different  departments  may  not  be  included  in  the 
cost  accounting.  The  close  analysis  to  which  the  un- 
systematized  type  of  management  has  been  recently 
subjected  has  set  a  new  standard  of  accomplishment 
before  the  management.  To  attain  results  new 
methods  of  management,  based  upon  close  analysis, 
are  proposed.  As  these  contrast  sharply  with  the 
older  methods,  a  new  type  has  been  established. 

13.  Committee  system. — One  method  which  is  com- 
ing more  and  more  into  use  is  the  committee  system 
of  management.  It  is  an  attempt  to  apply  the  same 
democratic  principles  of  government  to  factory  man- 
agement that  are  embodied  in  the  national  and  state 
governments.  The  primary  idea  is  to  enlist  the  co- 
operation of  the  men  in  the  shop  in  forming  plans  and 
offering  suggestions  for  the  good  of  the  company. 
By  means  of  frequent  meetings  and  a  thoro  airing  of 
opinions  an  esprit  de  corps  and  a  feeling  of  responsi- 
bility for  the  success  of  the  business  as  a  whole  are 
established.  In  its  method  this  system  is  the  op- 
posite of  the  military  type  of  management.  The 
committee  system  is  especially  well  adapted  to  fur- 
nish a  means  by  which  the  discontented  can  give  ex- 
pression to  their  feelings,  and  affords  a  valuable  aid 
to  the  management  in  locating  the  cause  of  any  dis- 
affection. Furthermore,  it  is  claimed  for  this  system 
that  it  provides  a  method  of  overseeing  whereby  an 
executive  totally  ignorant  of  shop  and  sales  processes 


114     FACTORY  AND  OFFICE  ADMINISTRATION 

is  provided  with  reliable  data  concerning  any  weak 
spots  in  the  production,  buying  or  selling  department 
or  in  the  office. 

14.  Work  of  the  committees. — The  work  which 
forms  the  basis  of  each  committee  discussion  must  be 
in  harmony  with  the  purpose  of  each  committee.     The 
following  will  be  suggestive  in  showing  the  funda- 
mental problems  which,  in  some  form  or  other,  must 
be  considered : 

1.  Routine  work  and  report  of  progress. 

2.  New  designs  and  inventions. 

3.  Cost  reductions  and  economy. 

4.  Plans  to  standardize  products. 

15.  Special  types,  divisional  and  departmental. — 
One  of  the  great  problems  of  railroad  management  is 
to  overcome  the  difficulties  imposed  upon  it  by  the 
great  distances  which  separate  the  operating  depart- 
ment from  the  source  of  control.     To  look  after  the 
details  of  operation  of  any  railroad  four  or  five  thou- 
sand miles  long  would  be  beyond  the  capacity  of  any 
general  manager.     Accordingly,  the  operating  terri- 
tory is  generally  divided  into  districts  and  its  manage- 
ment put  in  the  hands  of  subordinates.     The  division 
may  be  long  or  short,  according  to  circumstances. 
For  example,  the  Pennsylvania  Railroad  station  in 
Philadelphia  is  the  head  of  the  Philadelphia  division, 
but  the  average  length  of  the  divisions  of  this  same 
line  east  of  Pittsburgh,  outside  the  big  cities,  is  150 
miles.    That  the  details  of  a  territory  as  large  as  this 
may  be  managed,  considerable  power  must  be  vested 


FACTORY  MANAGEMENT  115 

in  some  local  authority.  The  divisional  superinten- 
dent, under  this  type  of  management,  is  therefore  a 
man  of  importance. 

No  matter  how  capable  a  man  the  superintendent 
may  be,  he  cannot  be  an  expert  in  several  directions. 
If  he  is  a  good  operating  man,  he  is  likely  to  be  un- 
fitted for  the  work  of  a  civil  or  mechanical  engineer. 
Hence  the  rise  of  a  departmental  type  of  management, 
in  which  the  operating  superintendent  confines  his 
work  to  his  specialty,  i.  e.,  to  the  operation  of  the 
trains,  and  is  aided  by  experts  in  mechanical  and  civil 
engineering.  Under  this  departmental  management 
the  divisional  superintendent  does  not  have  absolute 
control  over  all  activities.  For  example,  if  two  en- 
gines are  to  be  repaired  and  the  division  superin- 
tendent wishes  the  work  done  at  once,  he  must  first 
take  up  the  question  with  the  superintendent  of  motive 
power,  who  is  an  expert  in  such  matters.  The  latter 
officer,  however,  not  being  connected  with  the  local 
division  staff,  after  having  considered  the  advisability 
of  the  repairs,  would  then  refer  the  matter  to  the  mas- 
ter mechanic  who  is  located  in  the  division  superin- 
tendent's territory. 

Before  the  recent  discussions  on  the  subject  of  busi- 
ness efficiency  became  so  general,  there  were  three 
types  of  management,  and  this  classification  to  cover 
the  whole  field  in  a  much  broader  way  than  the  more 
recent  ones.  These  types  were  the  traditional  type, 
the  transitory  type  and  the  functional  type  of  man- 
agement. 


116     FACTORY  AND  OFFICE  ADMINISTRATION 

It  will  not  be  necessary  to  discuss  the  first  two 
types,  because  they  cover  in  a  general  way  the  kinds 
already  described.  The  boss,  military  or  strenuous 
types  of  management  would  fall  under  the  tradi- 
tional plan.  When  this  plan  has  been  improved  upon 
by  the  adoption  of  more  systematized  methods,  the 
type  is  spoken  of  as  transitory.  The  third  type,  or 
the  functional,  has  been  described  above.  Since  these 
three  types  embrace  all  the  others  we  may  briefly  re- 
view their  characteristics  and  see  their  contents  more 
clearly  if  we  study  the  following  synopsis  as  it  applies 
to  the  stores  department. 

TRADITIONAL  TYPE    TRANSITORY  TYPE     FUNCTIONAL  TYPE 

1.  Does   not  realize  that       1.  An    equipment    prop-       1.  Physical     appearance 
proper    space    for    storage  erly    arranged   for   storage,  resembles  Transitory  Type. 
is  important. 

2.  May  be  general  store-       2     (a).  Various    depart-       2.    (a).  Central      control 
room,    but    all    the    stores  ments  often  have  their  own  of  department  stores, 
seldom  found  there.  stores   but   not   under   cen-        (b).   Proper  system  laid 

tral  control.  out  in  orderly  way. 

(b).  E  very  thing  ar- 
ranged in  neat  and  orderly 
manner. 

3.  No    system    in    piling       3.  Everything  is  kept  in       3.   Provision  for  holding 
stores.     Generally     put     in  its  place.  and  piling  stores. 

place    most    convenient    at 

4.  No  person  to  assume      4    (a).  Storekeeper       is-      4.   (a).  Balance-of-stores 
and    carry   out   responsibili-  sues  all  stock,  but  no  cen-  clerk  controls  all  materials 
ties  for  the  order  in  which  tral  office  control.  from  central  office. 

stores  are  kept.  (b).  Stores  isued  on  req-       (6).  Materials    delivered 

uisition  only.  on    requisition    only    when 

(c).   Storekeeper  has  as-  signed    by    stores    clerk    in 
sistants    for   moving   stores  central  office, 
in  and  out.  (c).   Storekeeper  has  as- 

sistants.    All  act  on  orders 
from  central  office. 

5.  Proper      records      of       5     (a).     Perpetual       or       5.    (a).  Ledger  sheets  in 
stores    generally    missing,      "book"    inventory    kept    in  central  planning  office  have 

office  but  seldom  prede-  maximum  and  minimum  re- 
termined  maximum  and  quirements  for  each  kind 
minimum  requirements.  of  material. 

(6).  Office  Book  inven-  (?<)•  Balance-of-stores 
tory  is  balanced  with  stores  sheets  (ledger  sheets)  kept 
and  once  a  year  the  bal-  in  the  central  office.  Upon 
ance  checked  against  an  these  the  location  of  ma- 
actual  physical  inventory  terial  is  shown. 
of  stores.  (c).  All  bookkeeping  for 

stores    done    in    central   of- 
fice. 

6.  Some  kind  of  division  6.  Symbols  used  to  desig- 
and  classification  of  stores  nate  different  kinds  of 
will  be  found.  stores. 


FACTORY  MANAGEMENT  117 

TRADITIONAL  TYPE    TRANSITORY  TYPE     FUNCTIONAL  TYPE 

7  (a).  Sometimes  a  cen-  7.  (a).  All  work  on  ma- 
tral  planning  station  is  terials  planned  ahead  in 
found.  planning  department. 

(Z>).   In    the    station   the       (b).  All    planning    done 
operations    for    each    proc-  before      operating      depart- 
ess   are   written  out  before  ment  needs  them, 
work  is  started.  (c).  Materials      running 

(c).  Where  planning  sta-  low  noticed  at  once  and  a 
tion  is  not  in  operation,  ma-  supply  obtained  before  op- 
terials  are  often  wanted  be-  erations  begin, 
fore    it    is    discovered    that 
some    part    or    material    is 
missing. 

8.  "Supply     stores,     euch      8.  System  covers  all  sup- 
as  belting,  electrical  appli-  ply  stores, 
ances,  etc.,  are  not  usually 
put  under  the  general  sys- 
tem of  stores. 

9.  Special     men,     called 
"move  men,"  take  and  re- 
move materials  to  and  from 
machines,      thus     relieving 
workman  and  keeping  him 
from  looking  for  or  waiting 
for  his  materials. 

10.  Fire  protection. 

16.  Work  planned  ahead. — Perhaps  the  broadest 
contrast  between  the  functional  type  and  other  types 
is  in  the  planning  of  all  the  work  for  each  workman 
ahead  of  time.     The  principle  by  which  this  kind  of 
management  gains  control  of  the  operating  elements 
is  that  of  planning  completely  the  proper  execution  of 
the  work  before  a  single  move  is  made.     A  route  sheet 
showing  the  names  and  order  of  all  the  operations 
which  are  to  be  performed  is  made  out,  and  instruction 
cards  are  clearly  written  for  each  operation  period. 
Requisitions  on  the  stores  department  showing  the 
kind  and  quality  of  the  materials  and  where  they 
should  be  moved,  and  the  list  of  proper  tools  for  doing 
the  work  in  the  best  way,  are  prepared  for  each  opera- 
tion and  the  very  best  methods  for  performing  each 
operation  are  determined  in  advance  and  embodied  in 
the  instructions. 

17.  Shape  the  man  to  the  organization. — Shape  the 


118     FACTORY  AND  OFFICE  ADMINISTRATION 

man  to  the  organization,  not  the  organization  to  the 
man.  A  wise  policy  dictates  that  the  best  men  should 
be  placed  at  the  head  to  plan  and  organize  the  work  for 
less  able  men.  When  exceptional  men  assert  them- 
selves they  should  not  be  allowed  to  break  down  the 
machinery  and  do  the  work  single-handed,  but  they 
should  at  once  be  given  important  positions  where, 
by  constructive  work,  they  can  strengthen  that  ma- 
chinery. In  fact,  it  is  to  such  exceptional  men  that 
the  rule  applies  with  special  force,  "Let  no  man  be- 
come indispensable."  If  he  does,  the  organization 
collapses  with  his  exit.  Instead  of  building  up  the 
company,  he  ruins  it.  The  notable  tendency  of  our 
time,  in  accord  with  which  successful  individuals  have 
incorporated  their  undertakings,  thereby  voluntarily 
subordinating  themselves  to  their  ideas,  shows  that  the 
really  big  men  recognize  this  impersonal  nature  of 
organization.  The  method  of  the  efficiency  engineer 
is  distinct,  not  because  it  enumerates  new  principles, 
but  because  it  applies  in  greater  detail  and  in  a  more 
systematic  way  principles  which  are  well  established 
and  in  universal  use. 

18.  The  primitive  type  for  small  firms. — The  most 
primitive  form  of  management  and  the  form  which  is 
still  the  most  efficient  in  small  matters  is  found  in  those 
cases  where  the  owner  carries  "his  office  in  his  hat." 
This  primitive  owner  or  foreman  performs  each  one  of 
the  functions  of  management.  He  plans  the  work  of 
the  office,  he  digs  up  the  information  he  needs,  he  pro- 
vides the  necessary  machines  and  materials,  and  he 


FACTORY  MANAGEMENT  113 

hires  and  instructs  his  workmen.  When  the  establish- 
ment grows  beyond  the  capacity  of  one  head,  some  or 
all  of  these  functions  must  be  delegated  to  others. 
The  owner  hires  a  draftsman,  a  bookkeeper  and  a  fore- 
man, and  lets  the  latter  hire  and  instruct  the  work- 
men. As  the  work  increases  other  departments  are 
added  as  needed,  and  the  organization  becomes  more 
complex.  Permanent  progress  in  this  world  is,  after 
all,  a  process  of  evolution,  not  revolution.  Steadily 
from  generation  to  generation  the  efficiency  of  manu- 
facture, of  agriculture,  of  transportation  and  of  all  the 
many  other  activities  which  form  a  part  of  our  com- 
plex civilization,  has  increased.  And  since  our 
methods  are  still  far  from  perfect,  we  may  look  for- 
ward to  similar  or  even  greater  progress  in  the  fu- 
ture. 

REVIEW 

What  danger  to  efficient  management  is  likely  to  arise  when  a 
factory  or  office  grows  very  large  and  the  activities  become  nu- 
v  merous? 

Why  do  business  men  object  to  the  introduction  of  new  methods 
and  systems  into  an  office  or  factory? 

If  you  were  asked  to  distinguish  between  "red  tape"  and  or- 
ganization, what  series  of  statements  could  you  make  to  show  the 
difference  ? 

How  is  the  principle  of  specialization  in  management  being 
worked  out  with  reference  to  the  foreman? 

What  is  meant  when  the  remark  is  made  that  the  majority 
of  industries  are  unsystematized  ? 

Show  how  the  cost  records  of  a  factory  may  be  taken  as  a  guide 
in  deciding  to  what  type  of  management  the  factory  belongs. 

What  representative  form  of  government  is  being  used  in 
business  management? 

What  element  clearly  marks  off  the  functional  method  of  man- 
agement from  all  others? 


CHAPTER  X 

TYPES  OF  MANAGEMENT— THE  OFFICE 

1.  Function  of  the  office. — The  function  of  the  office 
is  to  facilitate  the  work  of  production  and  distribu- 
tion. In  other  words,  here  is  the  place  from  which 
the  facilitating  activities  are  directed.  In  its  usual 
sense,  the  "office"  is  the  part  of  a  business  establish- 
ment in  which  the  administrative  and  clerical  work  is 
performed.  That  is  to  say,  if  the  vice-president  hap- 
pens to  have  charge  of  the  factory,  his  headquarters 
are  said  to  be  "in  the  office."  The  department  of  the 
sales  manager,  the  advertising  manager,  treasurer  and 
accountant  are  also  regarded  as  parts  of  the  office. 
But  for  our  purpose — that  of  laying  down  basic  prin- 
ciples in  the  management  of  the  office — we  must  adopt 
a  different  point  of  view. 

It  has  already  been  explained  that,  generally  speak- 
ing, a  business  is  divided  into  four  basic  departments 
— the  production  department,  the  sales  department, 
the  financial  department  and  the  accounting  depart- 
ment. Each  has  its  own  specific  functions  to  per- 
form. The  production  department  supplies  the  art- 
icle to  be  sold,  the  sales  department  is  concerned  with 
selling  it,  the  financial  department  collects  and  dis- 
burses the  money  involved  in  the  conduct  of  the  entire 
business,  and  the  accounting  department  records  all 

120 


OFFICE  MANAGEMENT  121 

the  transactions,  summarizes  the  facts  and  presents 
the  results  in  statements  and  reports  for  use  in  further 
operations. 

The  office,  as  we  shall  have  to  regard  it,  performs 
the  clerical  work  required  by  these  four  depart- 
ments. In  the  production  department,  records  of  or- 
ders, quotations,  invoices,  stock,  requisitions  and  the 
like  are  constantly  needed.  •  The  whole  attention  of 
the  factory  superintendent  or  manager  should,  the- 
oretically, be  devoted  to  the  efficient  production  of 
goods.  This  calls  for  the  use  of  all  his  skill  and  ability 
in  the  handling  of  machinery,  plant,  men  and  ma- 
terials. He  is  interested  in  the  clerical  work  only  as 
it  is  an  aid  in  the  performance  of  his  duties.  When 
he  is  about  to  purchase  a  new  machine,  for  example, 
his  interest  does  not  lie  in  how  the  quotations  are  filed, 
but  in  the  bids  themselves.  If  the  factory  manager  is 
uncertain  as  to  the  specifications  on  an  order  going 
thru  the  plant  for  one  of  the  customers,  he  wants  the 
original  order  when  he  calls  for  it.  He  does  not  care 
how  the  order  is  found;  he  wishes  only  that  it  be 
brought  to  him  promptly. 

There  are  also  sales  records  and  statistics,  follow-up 
files,  prospect  lists,  clippings,  electros  and  other  mate- 
rial which  must  be  cared  for.  The  sales  manager,  like 
the  factory  superintendent,  is  supposed  to  give  his 
whole  thought  and  attention  to  increasing  sales.  It  is 
necessary  that  the  sales  records  be  reliable,  and  that 
they  be  on  hand  when  wanted.  Further  than  that  the 
sales  official's  interest  does  not  go. 


122     FACTORY  AND  OFFICE  ADMINISTRATION 

The  financial  department  also  has  its  records,  such 
as  credit  information,  lists  of  delinquents  and  the  like 
upon  which  it  relies  in  conducting  its  operations.  The 
accounting  department  requires  sundry  clerical  work, 
such  as  billing,  filing  vouchers,  etc. 

In  addition,  the  four  departments  referred  to  re- 
ceive and  send  out  mail,  which  must  be  typewritten, 
filed  and  otherwise  handled.  There  are  other  details 
incident  to  the  routine  of  every  office,  such  as  the  oper- 
ation of  duplicating,  addressing  and  other  machines, 
and  attending  to  callers,  errands  and  inter-office  com- 
munications. 

All  these  details  fall  within  the  scope  of  the  office 
proper.  From  a  management  point  of  view,  then,  the 
office  may  be  defined  as  that  part  of  a  business  organ- 
ization which  performs  the  purely  clerical  work  neces- 
sary in  the  conduct  of  the  whole  business. 

2.  Elements  of  management  applied. — The  same 
cardinal  elements  of  management  discussed  in  previ- 
ous chapters  are  present  in  the  management  of  the  of- 
fice. In  other  words,  we  face  the  problem  of  direct- 
ing forces  or  energy  toward  the  fulfilment  of  a  pur- 
pose. There  are,  for  this,  two  kinds  of  energy — 
human  and  mechanical.  The  purpose  of  the  office 
is  to  provide  the  clerical  work  necessary  in  the  con- 
duct of  the  entire  establishment.  To  perform  this 
work  expeditiously  and  efficiently  contributes  to  the 
profit-making  of  the  concern  in  the  same  sense  that 
increasing  sales  or  reducing  the  cost  of  production 
does. 


OFFICE  MANAGEMENT  123 

The  first  step  should  be  a  study  of  the  work  required 
of  the  office,  as  we  now  understand  the  term,  and  an 
analysis  of  the  amount  of  energy  available.  To  put 
the  matter  more  concretely,  we  may  compare  the  office 
manager's  work  with  that  of  a  contractor  about  to 
build  a  schoolhouse  or  other  building.  His  plans  and 
specifications  are  laid  before  him.  He  knows  what  is 
wanted.  He  knows,  too,  that  he  has  so  many  men,  so 
many  dummy  engines,  and  so  on.  The  men  and 
engines  represent  a  given  amount  of  energy,  which  the 
contractor  measures  by  the  amount  of  work  they  can 
perform.  A  bricklayer  can  lay  an  average  number  of 
bricks  a  day ;  a  forty-horse-power  engine  can  move  an 
average  number  of  loads  a  day. 

The  office  manager  may  have  five,  six  or  more 
departments  to  serve.  Each  department  requires 
certain  services  which  are  approximately  determin- 
able.  These  services  are  the  "results"  required  of 
him.  He  studies  the  people  on  his  force  and  the 
mechanical  appliances  at  his  command.  The  efforts 
that  the  two  groups  put  forth  represent  the  energy 
under  his  control.  He,  too,  measures  energy  by  re- 
sults. For  instance,  he  realizes  that  while  a  typist 
can  turn  out  about  900  lines  a  day,  a  duplicating  ma- 
chine can  produce  about  35,000  form  letters  a  day. 

Knowing  what  the  office  can  do,  with  its  present 
equipment  of  people  and  machines,  the  office  manager 
must  determine  whether  the  existing  standards  are 
sufficiently  high  and,  where  possible,  must  raise  the 
standards,  thru  the  introduction  of  new  methods  or  a 


124     FACTORY  AND  OFFICE  ADMINISTRATION 

better  grade  of  help,  or  by  reorganizing  the  work 
where  reorganization  is  required.  This  really  is  the 
axis  around  which  all  the  office  manager's  duties  re- 
volve. 

3.  Office  head. — The  term  "office  manager"  has 
been  used  above.  Since  the  duties  properly  within  the 
scope  of  the  office  may  be  separated  from  other  duties, 
and  since  the  management  of  the  office  may  be  consid- 
ered as  a  separate  function,  it  would  seem  that  there 
should  be  an  official  who  would  be  specifically  respons- 
ible for  its  efficient  conduct.  Theoretically  this  is 
true,  and  in  many  large  concerns,  such  as  the  West- 
inghouse  Air  Brake  Company  and  branches  of  the 
United  States  Steel  Company,  there  is  actually  such 
an  official.  In  the  majority  of  cases,  however — par- 
ticularly in  medium-sized  and  small  concerns — this 
duty  is  either  divided  among  a  number  of  department 
heads  or  is  only  one  of  a  number  of  duties  assigned  to 
an  officer  also  in  charge  of  some  other  branch  of  the 
concern's  activities.  This  feature  is  considered  in  a 
later  section  of  this  chapter.  It  is  desirable  now  to 
inquire  into  the  necessary  qualifications  of  the  person 
or  persons  charged  with  governing  the  office. 

We  have  seen  that  the  office  proper  is  in  close  touch 
with  every  other  department  in  a  business  establish- 
ment. As  a  matter  of  fact,  it  is  an  essential  to  the  effi- 
cient conduct  of  these  departments.  What  would  be 
easier,  for  instance,  than  to  frustrate  an  important 
plan  for  increasing  sales  by  neglecting  the  clerical 
features  of  the  plan?  Or  if  the  financial  department 


OFFICE  MANAGEMENT  125 

were  contemplating  a  special  campaign  to  stimulate 
collections  during  a  month  usually  "slow,"  the  person 
in  charge  of  the  clerical  work,  failing  to  comprehend 
the  importance  of  the  movement,  might  easily  cause  a 
loss  of  several  thousand  dollars  by  postponing  atten- 
tion to  certain  details  in  favor  of  "more  pressing 
things  to  be  done."  It  is  highly  desirable,  then,  that 
there  be  complete  harmony  between  the  office  and  all 
the  other  departments. 

There  is  a  corollary  to  this  conclusion.  The  per- 
sons in  charge  of  the  office  must  be  thoroly  familiar 
with  the  purposes  and  policies  of  all  the  other  depart- 
ments, and  must  be  fully  aware  of  the  import  of  every 
move  that  is  made  involving  clerical  work.  This 
would  hardly  be  possible  unless  these  persons  under- 
stand the  principles  that  underlie  the  conduct  of  busi- 
ness in  general.  Knowledge  of  what  the  sales  depart- 
ment is  for,  of  how  it  operates,  of  the  method  of 
the  work  in  the  production,  financial  and  accounting 
departments  is  important  to  the  office  head.  He 
should  also,  of  course,  be  thoroly  familiar  with  the  sub- 
ject of  organization  and  management  and  should  be 
in  touch  with  all  the  modern  office  methods  and  de- 
vices. In  addition,  he  should  possess  the  natural  qual- 
ifications of  any  leader — tact,  precision,  sympathy, 
f orcef  ulness  and  a  keen,  accurate  perception  of  the  de- 
tails of  problems  presented  for  his  decision. 

4.  Selecting  and  handling  employes. — The  prob- 
lem of  directing  the  office  force  so  that  its  members 
will  work  harmoniously  and  with  maximum  efficiency 


126     FACTORY  AND  OFFICE  ADMINISTRATION 

is  one  of  the  hardest  to  solve.  Yet  the  principles  of 
good  administration  are  as  capable  of  application  in 
the  management  of  an  office  as  they  are  anywhere  else. 

It  is  important,  first  of  all,  that  proper  care  be  given 
to  the  selection  of  employes.  The  fourteen-year-old 
applicant  for  the  office  boy's  position  should  be  a  fu- 
ture executive.  He  should  be  examined  with  that  end 
in  mind,  and  his  physical  and  mental  characteristics 
should  be  carefully  studied.  During  the  last  few 
years  much  progress  has  been  made  in  establishing 
scientific  physical  tests.  Some  of  the  large  concerns 
have  installed  medical  departments  for  this  sole  pur- 
pose. The  education,  home  surroundings  and  future 
ambition — all  of  which  may  be  determined  by  discreet 
questioning — are  also  important  barometers  in  helping 
an  employer  to  judge  the  ability  of  a  person  to  per- 
form the  work  to  which  he  or  she  is  assigned  and  the 
probability  as  to  whether  the  employe  is  likely  to  ad- 
vance to  a  more  important  position. 

Coupled  with  the  selection  of  employes  is  the  im- 
portance of  assigning  to  them  the  duties  which  they  are 
by  nature  best  fitted  to  perform.  This  seems  obvi- 
ous, yet  how  many  clerks  are  at  the  billing  desk  when 
they  should  be  order  clerks  or  entry  clerks  ?  In  cases 
where  there  is  an  original  examination  such  as  has  just 
been  discussed,  it  is  only  a  matter  of  carrying  the  proc- 
ess one  step  further  and  determining  what  qualifica- 
tions are  necessary  to  the  performance  of  a  given  kind 
of  work.  In  the  mailing  department  of  one  of  the 
large  publishing  houses,  for  example,  it  has  been 


OFFICE  MANAGEMENT  127 

proved  that  an  active,  nervous  girl  can  turn  out  more 
work  than  a  calm,  self-contained  girl,  even  tho  the  lat- 
ter may  move  decisively. 

The  welfare  movement  which  had  its  inception  in 
factories  is  now  being  applied  to  offices  as  well.  In 
many  of  the  large  companies,  like  the  Metropolitan 
Life  Insurance  Company  and  the  American  Tele- 
phone and  Telegraph  Company,  light,  airy  lunch 
rooms  are  provided,  where  wholesome  food  is  tastily 
served  at  low  prices.  The  National  City  Bank  of 
New  York,  Spencer  Trask  &  Company  and  other 
large  companies  have  provided  club  rooms,  libraries 
and  recreation  rooms  where  office  employes  may 
gather  after  office  hours  and  listen  to  lectures  on  busi- 
ness subjects,  discuss  outings  and  so  on.  All  these 
movements  should  be  encouraged  and  aided  by  office 
managers  and  by  the  heads  of  concerns.  They  stimu- 
late among  the  employes  loyalty,  cooperation  and  an 
interest  in  one  another  which  in  the  long  run  result  in 
an  increased  interest  in  the  work. 

5.  Establishing  standards. — Office  work  does  not 
lend  itself  well  to  scientific  management.  Yet  it  is 
possible  to  establish  standards  and  by  means  of  re- 
ports to  determine  the  efficiency  of  employes.  Mar- 
shall Field  &  Company  of  Chicago,  the  Simmons 
Hardware  Company  of  St.  Louis  and  other  concerns 
have,  for  instance,  placed  their  typing  departments 
upon  an  efficient  basis  in  the  following  manner :  By 
means  of  a  register  which  records  the  number  of 
strokes  on  the  typewriter  keys  they  obtain  a  fairly  ac- 


128     FACTORY  AND  OFFICE  ADMINISTRATION 

curate  record  of  each  girl's  output.  In  other  cases 
the  number  of  lines  (of  a  given  length) ,  or  the  number 
of  words,  is  counted  by  the  chief  of  the  typing  de- 
partment. The  following  is  a  sample  week's  record 
in  one  of  the  concerns  which  use  the  line  method  of 
calculation.  The  high  records  were  made  by  opera- 
tors on  dictating  machines  turning  out  standard  para- 
graph letters,  while  the  lower  records  were  made  by  be- 
ginners or  by  girls  on  difficult  dictation.  The  initials 
in  the  top  row  indicate  the  correspondents  who  dic- 
tated during  the  week ;  the  names  of  the  typists  appear 
in  the  left-hand  column: 

TAT  LRS  BMO  FL  BL  EWC  MHE  HT  COPY  TOT. 

Miss  Smith 270  670      585    750    1,065 '  60  1,240    4,640 

Miss  Jones 85   ...  4,900    145     95     415     5,640 

Miss  Brown 310  4,870 590   ...      300     6,070 

Miss  Richards 250  ...  3,900      150   ...   1,545     5,845 

Miss  Hart 655     850 420  ...  2,040    3,965 

355  670  6,450  5,970  750  3,900  2,370  155  5,540  26,160 

These  records  form  the  basis  of  a  bonus  system. 
Any  such  bonus  system  must  necessarily  be  elastic  and 
more  or  less  arbitrary.  In  this  particular  case  the 
committee  which  awards  the  bonuses  takes  into  consid- 
eration the  number  of  lines,  the  nature  of  the  work 
and  the  accidents  and  other  delays  reported.  The  op- 
erators cannot  tell  in  advance  just  what  their  bonuses, 
if  any,  will  be.  Their  reliance  on  the  fairness  and 
judgment  of  the  committee,  however,  helps  to  make 
the  system  effective.  In  addition,  the  figures  posted 
on  a  bulletin  board  arouse  a  friendly  competitive 
spirit. 


OFFICE  MANAGEMENT  129 

Many  large  concerns  have  discontinued  bonus  and 
piecework  systems  in  the  office.  The  American  Law 
Book  Company  of  New  York  tried  a  piecework 
system  but  gave  it  up.  So  did  the  Sears,  Roebuck 
Company  of  Chicago.  At  one  time  five  hundred 
clerks  in  the  entry  department  of  this  company  were 
paid  on  a  piecework  basis,  but  the  plan  was  found  im- 
practicable. 

6.  Military  type  of  organization. — There  are  three 
types  of  office  organization:  first,  the  military  type; 
second,  the  functional  type;  third,  a  combination  of 
the  military  and  functional  types,  which  may  be 
termed  semi-functional.  In  the  military  type,  which 
is  the  most  common,  the  head  of  each  department  con- 
trols all  the  work  that  is  performed  in  the  depart- 
ment, irrespective  of  its  character.  The  sales  man- 
ager, for  example,  not  only  is  provided  with  assistants 
for  writing  to  salesmen,  for  handling  mail-order  work 
and  for  other  purely  sales  activities,  but  in  addition  has 
his  own  stenographers,  typists,  statisticians,  file  clerks, 
mail  clerks  and  errand  boys.  The  sales  department, 
under  these  conditions,  becomes  practically  a  business 
office  in  itself.  On  the  one  hand,  it  is  credited  with 
sales  and  on  the  other  hand,  it  is  charged  with  its  ex- 
penses. This  is  an  easy  method  of  determining  the 
exact  ratio  of  sales  expense  to  income.  As  has  al- 
ready been  pointed  out  in  an  earlier  part  of  this  book, 
however,  the  military  form  of  organization  is  obviously 
inefficient  for  the  sales  department,  for  under  such  a 
system  this  department  is  forced  to  perform  functions 


130     FACTORY  AND  OFFICE  ADMINISTRATION 

entirely  outside  its  scope.  The  selling  type  of  mind  is 
different,  as  a  rule,  from  the  type  needed  for  the  effi- 
cient regulation  of  routine. 

The  same  basic  objections  apply  to  the  military 
form  of  organization  in  the  other  departments. 

7.  Functional  type. — The  separation  of  strictly 
office  work  from  that  within  the  scope  of  the  sales, 
production,  financial  and  accounting  departments  is 
similar  to  the  change  which  takes  place  in  the  factory 
organization  when  the  functional  type  is  substituted 
for  the  military.  The  duties  of  the  gang  foreman,  in 
the  latter  case,  are  distributed  among  a  number  of 
functional  foremen,  each  with  his  own  special  duty  to 
perform.  In  the  office,  the  department  heads  confine 
their  energy  to  selling,  manufacturing,  financing  or 
accounting,  as  the  case  may  be.  The  specialized  func- 
tion of  managing  the  office  is  turned  over  to  a  person 
trained  for  this  duty.  Frequently  we  find  an  officer 
— usually  the  accountant — performing  the  dual  task 
of  running  an  office  and  one  of  the  four  other  depart- 
ments. While  this  arrangement  is  sometimes  expe- 
dient, especially  when  a  concern  is  not  large  enough  to 
warrant  the  employment  of  an  office  manager,  it  does 
not  conform  strictly  to  the  accepted  idea  of  a  func- 
tional organization. 

When  the  functional  idea  is  in  force  it  is  carried  out, 
so  far  as  possible,  thruout  the  entire  office  organiza- 
tion. Except  in  cases  where  there  is  not  enough  work 
to  keep  a  person  busy,  one  specific  task  is  assigned  to 


OFFICE  MANAGEMENT  131 

each  employe.  Functional  organization  in  a  modified 
form  is  illustrated  in  Figure  9. 

During  the  change  to  the  functional  scheme  of  or- 
ganization, in  this  case,  numerous  instances  were  dis- 
covered where  one  clerk  could  do  the  work  that  had 
formerly  occupied  two.  The  office,  in  this  organi- 
zation, is  a  separate  department  directly  responsible 
to  the  executive  committee.  It  is.not  a  subdepart- 
ment  of  any  one  department,  but  a  subdepartment  of 
them  all.  All  the  clerical  work  is  under  the  supervi- 
sion of  the  office  manager,  and  he  has  his  subordinate 
chief  clerks,  whose  duties  are  also  specialized.  The 
functional  idea  is  carried  to  its  consummation  in  the 
collection  department  where  each  clerk  has  one  task 
to  perform.  One  checks  bills,  receipts  and  addresses, 
another  types  form  letters,  another  enters  remittances, 
and  so  on. 

8.  Semi-functional  organization. — We  frequently 
find  an  office  organization  almost  on  a  functional  basis, 
but  still  adhering  in  minor  respects  to  the  old  scheme 
of  management.  For  good  reasons,  the  various  de- 
partments retain  their  own  stenographers  and  one  or 
two  special  clerks.  The  work  may  be  of  a  confiden- 
tial character,  or  the  clerk  may  need  specialized  train- 
ing that  can  be  obtained  only  by  carefully  obeying  the 
head  of  the  department  or  his  assistants. 

The  organization  of  the  office  in  the  White  Com- 
pany, Cleveland,  Ohio,  manufacturers  of  motor  cars, 
is  of  this  character.  In  this  company  the  sales  de- 


OFFICE  MANAGEMENT  133 

partment  is  in  two  divisions,  one  in  charge  of  the  sec- 
ond vice-president,  the  other  under  the  jurisdiction  of 
the  secretary.  The  auditor  is  also  office  manager,  but 
various  sales  departments  and  subdepartments  have 
retained  some  clerical  help.  The  advertising  depart- 
ment is  a  typical  example.  Specially  trained  clerks 
are  usually  necessary  in  advertising  work  and  we  find 
that  special  stenographers  and  clerks  are  assigned  to 
this  department. 

9.  Committee  system. — The  committee  system  is 
employed  in  the  office  with  excellent  effect.  In  Fig- 
ure 9,  it  will  be  seen  that  the  office  manager  is  a  mem- 
ber of  the  executive  committee.  The  value  of  this  ar- 
rangement is  evident  when  it  is  remembered  that  the 
force  he  controls  is  in  constant  attendance  upon  the  de- 
partments of  which  the  other  members  of  the  commit- 
tee have  charge.  Thru  the  committee  meetings  the 
office  manager  keeps  in  touch  with  the  plans  and  poli- 
cies of  the  various  departments,  and  is  thus  enabled 
to  direct  his  force  with  an  intelligent  regard  for  that 
work  which  should  take  precedence  over  other  work. 
Here,  too,  he  learns  of  the  shortcomings  of  his  force, 
receives  suggestions  that  add  to  its  efficiency  and  im- 
bibes the  spirit  of  the  entire  organization,  which  in  turn 
he  communicates  to  his  department  heads  thru  an  of- 
fice committee.  The  office  committee  is  composed  of 
the  office  manager  and  his  chief  clerks.  The  fre- 
quency of  the  meetings  of  the  executive  committee  and 
the  office  committee  depends  upon  the  nature  of  the 
business.  The  former  usually  meets  more  often  than 


134     FACTORY  AND  OFFICE  ADMINISTRATION 

does  the  latter.  There  is  danger  of  carrying  the  com- 
mittee system  too  far,  just  as  there  is  of  not  carry- 
ing it  far  enough.  The  routine  of  the  day  should  not 
be  broken  any  more  than  necessary;  it  is  often  advis- 
able, in  fact,  to  hold  meetings  during  the  lunch  hour 
or  on  Saturday  afternoons. 

10.  Suggestion  system. — The  suggestions  offered 
by  office  boys  and  other  minor  employes  frequently 
surprise  even  the  most  ardent  advocates  of  the  sugges- 
tion system.     The  usual  plan  is  to  offer  two  or  three 
definite  money  prizes  for  the  best  suggestions  turned 
in  during  a  given  period,  say  one  month.     The  sug- 
gestions are  unsigned,  a  copy  being  kept  by  the  author. 
They  are  deposited  in  a  box  designed  for  that  pur- 
pose, or  are  laid  on  the  desk  of  the  office  manager. 
Either  the  executive  committee  or  the  office  committee 
passes   on   the   various    suggestions   submitted   and 
awards  the  prizes,  posting  the  winning  suggestions  on 
a  bulletin  board.     The  contributors  submit  their  cop- 
ies, receive  the  prizes,  and  their  names  are  then  writ- 
ten on  the  posted  documents.     Suggestions  in  regard 
to  providing  a  motor  for  a  hand-driven  device,  reduc- 
ing the  sizes  of  various  pieces  of  stationery  to  avoid 
folding,  pasting  carbons  to  letters  instead  of  pinning 
them,  thus  saving  space  in  the  files  and  the  cost  of  pins 
or  clips,  and  other  ideas  of  this  sort  are  the  most  com- 
mon.    Very  often,  however,  advertising  and  selling 
ideas  and  suggestions  of  similar  importance  come  from 
the  most  unexpected  sources. 

11.  Arrangement  and  lighting  of  office. — While  the 


OFFICE  MANAGEMENT  135 

subject  of  office  arrangement  might  properly  be 
treated  under  the  head  of  organization  it  is,  neverthe- 
less, an  important  element  in  the  management  of  the 
office  and  may  well  be  considered  at  this  point. 

The  arrangement  of  desks,  filing  cabinets  and  other 
equipment  depends  much  upon  the  type  of  organiza- 
tion. Under  the  functional  type,  where  the  filing  is 
concentrated  in  one  department,  where  the  typists  are 
gathered  under  one  chief  and  the  other  functions  are 
similarly  segregated,  it  is  obvious  that  the  equipment 
is  grouped  according  to  the  departments.  The  prob- 
lem then  becomes  one  of  allotting  the  proper  floor 
space  and  position  to  each  department.  The  general 
principle  of  progression  should  be  adhered  to  as  far  as 
possible.  It  is  usual  to  follow  the  course  taken  by 
the  orders  received.  This  is  illustrated  by  the  floor 
plan  of  the  office  of  a  large  clothing  house  in  New 
York  (Figure  10).  The  orders  are  first  laid  on  the 
president's  desk.  From  there  they  go  to  the  credit  de- 
partment, and  when  the  sales  manager  receives  them 
he  knows  whether  or  not  they  are  approved  by  the 
credit  department.  After  receiving  his  approval  they 
proceed  to  the  order  department,  where  the  produc- 
tion orders  are  made  and  the  proper  copies  sent  to  the 
filing  department  for  the  sales  and  other  files,  to  the 
billing  department  and  to  the  factory  superintendent. 
The  latter  is  not  far  distant  from  the  purchasing 
agent,  with  whom  he  is  in  frequent  communication. 
The  treasurer  is  located  close  to  the  credit  and  account- 
ing departments.  The  shipping  slips  come  up  from 


136     FACTORY  AND  OFFICE  ADMINISTRATION 


the  shipping  department,  on  the  floor  below,  to  the 
billing  department,  which  is  across  the  hall  from  the 
accounting  department.  The  filing,  mailing  and 


CREDIT 

TREASURER    CASHIERS 

DEPART- 

AUDITOR 

PRESIDENT 

MENT 

_J  1                       1                 1 

1  

—  i  ACCOUNTING 

n7rpD.                                  PRIVATE  CORRIDOR 

|    TION     1                                 MAIN  CORRIDOR 

DEPARTMENT 

VICE            1 

FACTORY 

1 

PRESIDENT 

SUPERINTENDENT 

BILLING 

DEPARTMENT 

SECRETARY 

RRIDOR 

| 

REST  ROOM 
AND  LIBRARY 



-H. 

'o 

O 

1      SALES 
MANAGER 

o: 
0 

u 

MAILING              g 

'DEPARTMENT 

SALES 

DIRECTORS' 
ROOM 

PRIVA 

< 

5 

STENOGRAPHIC 
DEPARTMENT 

—    

--f 

DEPARTMENT 

PURCHA9-I 
AGENT    1 

FILING 

_       _J 

| 

DEPARTMENT 

ORDER 

PURCHASING 
DEPARTMENT 

OFFICE 
MANAGER         1 

1 

DEPARTMENT 

MAIN  CORRIDOR 

ELEVATORS  AND  STAIRWAYS 

FIGURE  10. 


-FLOOR-PLAN  OF  OFFICE  IN  NEW  YORK  CLOTHING 
ESTABLISHMENT. 


stenographic  departments  are  also  conveniently  lo- 
cated.    There  is  very  little  doubling  back  in  this  office. 
Care  should  be  given  to  the  proper  lighting  of  the 


OFFICE  MANAGEMENT  137 

office.  Poor  light  is  responsible  for  much  of  the  in- 
efficiency in  office  work.  Lighting  has  been  reduced 
to  a  science,  and  it  is  in  most  cases  advisable  to  call 
in  an  expert.  Sometimes  it  is  found  cheaper  to  in- 
stal  an  indirect  lighting  system;  in  others,  a  direct 
system  with  properly  diffused  light  is  better.  The 
candle-power,  the  kind  of  shades,  the  distance  of  one 
light  from  another  and  from  the  work — all  these  are 
important  points  to  be  considered. 

REVIEW 

Study  the  full  significance  of  the  term,  "facilitating  activities/' 
as  applied  to  the  functions  of  the  office. 

Should  the  activities  of  the  office  be  looked  upon  as  non-pro- 
ductive in  the  sense  that  these  activities  do  not  help  produce 
profits  or  produce  the  goods  ? 

Why  can  the  cardinal  principles  of  management  be  applied  to 
the  office  organization  as  well  as  to  the  factory? 

What  vital  principle  in  management  would  you  say  has  been 
violated  if,  upon  thoro  investigation,  you  should  find  numerous 
"misfits"  at  work  on  the  various  jobs  in  the  office? 

Do  you  think  it  advisable  to  establish  as  many  standard  opera- 
tions as  possible  in  an  office?  Why? 

Show  how  you  would  apply  the  functional  method  of  organiza- 
tion to  an  office. 

An  expert  in  gas  illumination  advised  a  manager  to  change  his 
method  from  one  involving  a  central  source  of  lighting  to  one  by 
which  each  desk  is  lighted  individually.  The  manager  dismissed 
the  expert  without  listening  to  his  argument.  On  what  particu- 
lar point  would  you  judge  the  manager  to  be  weak  as  an  execu- 
tive ? 


CHAPTER  XI 

MODERN  AIDS  IN  MANAGEMENT— PLANNING 

1.  Real  management  is  concerned  with  policies,  not 
details. — Most  managers  will  admit  that  they  are  han- 
dicapped because  they  must  attend  to  too  many  details. 
Foremen,  superintendents  and  bosses  will  generally 
admit  that  they  are  overworked.     Yet  if  a  superior 
officer  should  suggest  that  some  of  their  duties  be 
lightened  or  removed,  how  many  of  these  men  would 
submit  without  any  protest?     It  is  this  factor  more 
than  any  other  in  human  nature — the  unwillingness 
to  surrender  any  fraction  of  authority — that  stands  in 
the  way  of  progressive  management.     One  frequently 
hears  the  remark  made  that  the  head  of  the  concern 
is  the  last  one  to  be  convinced  that  his  own  organiza- 
tion might  be  helped  and  his  own  effectiveness  in- 
creased if  some  of  his  responsibilities  were  shifted  to 
the  backs  of  other  men.     He  is  more  likely  to  object, 
because  he  has  more  authority  to  surrender  than  the 
men  below  him. 

2.  Adjusting  authority  to  responsibility. — How- 
ever strenuous  may  be  the  objection  in  certain  quarters 
to  any  particular  system  of  scientific  management,  it 
is  generally  conceded  that  there  are  certain  aids  which 
will  help  the  manager  to  lighten  his  burden  and  in- 

138 


PLANNING  IN  MANAGEMENT  139 

crease  his  efficiency  without  lessening  any  part  of 
his  total  authority.  Not  all  of  these  aids,  of  course, 
can  be  mentioned,  but  a  few  which  have  been  tried 
and  found  successful  will  be  given.  Perhaps  the 
simplest  is  a  chart  showing  the  form  of  the  organi- 
zation, the  effectiveness  of  which  will  be  much  in- 
creased if  it  is  supplemented  by  an  organization 
record.  Other  devices  which  are  gradually  being 
adopted,  as  a  whole  or  in  part,  are  the  planning  de- 
partment, time-studies,  standards,  mnemonic  symbols, 
bonus  rewards  for  labor  and  welfare  work. 

3.  Organization  charts  a  prime  requisite. — A  chart 
showing  clearly  the  line  of  authority  and  responsibility 
of  each  individual  in  an  organization  will  go  far  to- 
ward removing  many  inter-departmental  jealousies. 
The  chart  should  be  so  simple  that  it  will  be  self-ex- 
planatory upon  inspection.  Each  man's  position  is 
thus  made  perfectly  clear  and  he  easily  informs  him- 
self as  to  what  course  to  take  when  transacting  busi- 
ness with  other  departments.  If  the  chart  is  for  a 
factory,  each  workman  will  know  to  what  particular 
gang  boss  or  job  boss  he  is  directly  responsible;  each 
gang  boss  or  job  boss  will  know  to  what  foreman  he 
must  report ;  each  foreman  will  know  to  what  superin- 
tendent he  must  answer ;  and  each  superintendent  will 
know  where  his  authority  begins  and  ends  with  respect 
to  other  departmental  heads.  Furthermore,  the  chart 
should  show  who  is  responsible  for  machines  and 
equipment.  To  be  most  effective  the  chart  should  be 
hung  in  a  conspicuous  place.  Each  of  the  manufac- 


140     FACTORY  AND  OFFICE  ADMINISTRATION 

turing  departments  should  have  one,  as  well  as  the 
office ;  24  x  36  inches  is  a  suitable  size.  When  made 
in  the  form  of  blue-prints,  charts  are  inexpensive,  but 
they  should  be  framed  and  protected  by  glass,  to  shield 
them  from  pencil  markings  and  other  injuries. 

4.  Charts  clarify  ideas. — These  charts  will  not  only 
prove  themselves  an  aid  in  instructing  the  employes  in 
the  workings  of  the  organization,  but  they  will  be 
found  to  be  of  great  value  in  helping  the  manager  to 
clarify  his  ideas  and  in  adding  to  his  information 
regarding  his  organization.  Any  manager  who  has 
never  planned  a  chart  of  this  kind  will  be  surprised 
to  find  how  many  gaps  there  are  in  his  knowledge  of 
his  own  plant.  Furthermore,  the  making  of  such  a 
chart  compels  the  manager  to  look  upon  his  organiza- 
tion from  the  point  of  view  of  functions  and  activities 
rather  than  from  the  standpoint  of  the  persons  who 
are  running  the  business. 

This  elimination  of  the  personal  equation  is  one  of 
the  first  things  which  the  manager  must  accomplish 
if  he  would  obtain  absolute  control  of  his  business. 
He  can  look  at  his  organization  as  if  it  were  a  ma- 
chine and,  having  studied  the  various  parts  and  their 
functions,  he  can  take  up  the  question  of  the  personnel 
and  compare  the  qualifications  of  the  different  men 
who  might  run  that  particular  part  of  the  organiza- 
tion. 

The  following  chart  (Fig.  11)  brings  out  in  a 
graphic  way  the  elements  mentioned  above.  This 
particular  form  of  organization  was  taken  for  various 


IV— 11 


141 


142     FACTORY  AND  OFFICE  ADMINISTRATION 

reasons.  It  is  a  good  illustration  of  that  type  in  which 
the  departmental  or  functional  principle  is  carried  out 
in  a  modified  way  to  suit  a  small  industrial  plant. 
Moreover,  it  shows  the  position  of  the  planning  de- 
partment in  its  relation  to  the  other  departments. 

It  will  be  noticed  that  on  this  chart  (Fig.  11)  the 
press  shop  is  divided  into  groups  of  men  and  machines. 
Each  group  has  a  gang  boss,  who  is  responsible  to  the 
press  shop  foreman.  The  departments  other  than  the 
press  shop  are  all  small  and  employ  but  few  men,  ex- 
cept the  tool  room  and  the  die  shop.  The  erecting 
floor  is  in  charge  of  the  gang  boss,  under  whom  are 
several  assistant  gang  bosses,  according  to  the  number 
of  jobs  or  different  kinds  of  work  in  process  on  the 
floors  assigned. 

It  will  be  noticed  that  the  planning  department  is 
the  medium  thru  which  the  superintendent  controls  the 
shop.  All  orders,  designs,  detailed  drawings,  super- 
vision of  new  work,  etc.,  emanating  from  either  the 
counting  room  or  the  engineering  and  drafting  rooms, 
pass  thru  the  superintendent's  hands  and  the  planning 
department  before  reaching  the  manufacturing  de- 
partment. 

5.  Organization  records. — The  organization  chart 
will  meet  its  full  possibilities  only  when  it  is  supple- 
mented by  the  organization  record.  It  consists  of  a 
book  of  written  instructions  covering  the  duties  of  each 
person  shown  on  the  organization  chart.  Copies  of 
this  record  are  furnished  to  each  employe  or  officer 
concerned.  Managers  who  add  this  important  aid  to 


PLANNING  IN  MANAGEMENT  143 

their  equipment  will  promote  their  interests  in  three 
ways:  (1)  writing  of  instructions  prevents  the  mis- 
understanding or  forgetting  of  oral  orders;  (2)  writ- 
ing out  instructions  generally  clarifies  the  ideas  of  the 
men  who  issue  them;  (3)  writing  leaves  a  permanent 
record  of  all  instructions  which  have  been  issued,  often 
preventing,  as  a  consequence,  many  confusions  and 
conflicts  of  authority.  Oral  instructions  leave  no 
written  record  for  future  employes.  Men  who  are 
removed  to  other  departments,  or  who  leave  the  em- 
ployment of  the  firm  altogether,  often  carry  with 
them  knowledge  of  important  details  which  the  firm 
is  likely  to  lose  because  the  foreman,  not  appreciating 
the  importance  of  these  details  in  the  work,  neglects 
to  see  that  they  are  recorded.  Under  a  system  of 
proper  written  instructions,  however,  this  could  not 
occur,  for  all  important  details  are  noted  as  being  a 
part  of  the  whole  operation. 

6.  Written  records  a  basis  for  standards. — It  should 
be  noted  here  also  that  a  slip  of  written  instructions  is 
absolutely  necessary  if  a  manager  wishes  to  adopt  one 
of  the  further  aids  mentioned  later  on,  namely,  prede- 
termined standards  for  the  accomplishment  of  his 
work.  If  such  a  record  is  properly  kept  up  it  will  fur- 
nish the  management  with  a  complete  account  of  all 
the  details  of  the  business.  It  will  also  contain  all 
the  forms  from  the  accounting  and  other  departments, 
with  a  full  description  and  explanation  of  their  uses. 

It  need  hardly  be  mentioned  that  all  changes  in  the 
instructions  should  be  written  out,  copies  handed  to 


144     FACTORY  AND  OFFICE  ADMINISTRATION 

the  persons  affected  and  a  duplicate  posted  in  the  or- 
ganization records.  It  may  not  be  necessary  to  record 
the  duties  of  the  manager,  but  beginning  with  the  as- 
sistant manager  and  continuing  on  down  to  the  lowest 
man  in  the  organization,  the  record  should  contain 
written  instructions  covering  the  specific  duties  of  each 
man.  These  instructions,  if  compiled  in  book  form, 
would  make  a  goodly  volume,  and  the  collection  of 
the  data  requires  much  time  and  labor.  After  the 
information  is  gathered  it  has  to  be  continually  re- 
vised. These  are  the  objections  generally  offered 
against  adopting  such  a  record  as  an  aid  to  the  man- 
ager. If  all  this  information  which  is  floating  about 
in  the  possession  of  the  employes,  unknown  to  the 
manager,  is  vitally  essential  to  the  accomplishment  of 
the  work,  then  it  is  well  worth  while  to  have  it  put 
down  in  writing  even  tho  the  process  does  require 
much  labor  and  money. 

7.  Lack  of  control  causes  confusion. — One  of  the 
commonest  sights  in  the  ordinary  machine  shop  is 
men  running  here  and  there  looking  for  tools,  ma- 
terials or  seeking  further  instructions.  To  a  greater 
or  less  extent  this  lack  of  system  is  found  in  every 
business  which  has  not  adopted  some  method  of  rout- 
ing material  or  tools  to  the  mechanic  and  supplies  to 
the  clerks  and  operators,  whereby  they  may  be  sup- 
plied with  everything  necessary  to  carry  out  their 
work.  Such  a  condition  denotes  a  lack  of  strict  super- 
vision. This  situation  has  grown  up  largely  because 
industries  have  increased  so  in  size;  that  is,  business 


PLANNING  IN  MANAGEMENT  145 

enterprises  have  added  to  their  equipment  and  to  their 
labor  forces,  while,  on  the  other  hand,  they  have  not 
had  a  correspondingly  large  extension  in  the  depart- 
ments of  management  and  administration. 

8.  A  typical  example  of  nonproductive  labor. — A 
machine  shop,  for  instance,  employing  a  superintend- 
ent and  a  foreman  would  be  called  upon  to  supervise 
the  efforts  of  125  men  or  more.  They  are  perhaps 
given  clerical  assistance  to  the  extent  of  two  or  three 
clerks;  and  such  a  situation  might  be  considered  an 
ideal  one  by  many  managers.  The  so-called  nonpro- 
ductive labor  has  been  reduced  to  the  minimum.  Such 
managers,  however,  lose  sight  of  the  fact  that  the  brain 
energy — namely,  the  planning  which  must  accompany 
every  operation — forms  the  greatest  part  of  the  work. 
It  is  the  same  old  story  again  of  making  the  brain  save 
the  heels;  and  in  an  office,  shop  or  factory,  when  the 
heels  of  the  employes  are  working,  generally  some 
machine  or  other  important  costly  device  is  being  left 
unused,  and  the  output  is  being  restricted  by  the  un- 
productive activity  of  both  men  and  machine.  A  flock 
of  "order  chasers"  running  thru  a  plant  is  a  sure  sign 
that  there  is  little  direct  supervision  or  centralized  con- 
trol of  the  productive  process. 

The  motto  of  many  business  executives  seems  to  be : 
"Millions  for  machines  and  expert  machinists,  but  not 
one  cent  for  supervision."  Money  spent  for  men  who 
would  plan  the  work  before  it  enters  the  operating  de- 
partment is  looked  upon  as  tribute.  It  appears  that 
one  of  the  best  aids  in  overcoming  the  handicap  im- 


146      FACTORY  AND  OFFICE  ADMINISTRATION 

posed  upon  the  manager  by  the  extensive  operations 
which  must  be  carried  on  under  modern  business  con- 
ditions, is  the  establishment  and  maintenance  of  a 
planning  department. 

9.  Planning  is  specialized  management. — Planning 
is  carrying  into  the  supervising  activities  the  idea  of 
specialization,  which  has  been  operating  in  the  produc- 
tion side  of  our  industries  for  the  last  hundred  years. 
Specially  trained  men  must  plan  and  analyze  all  the 
work,  methods,  etc.,  and  prepare  the  way  for  the  work- 
ingman  to  produce  at  his  highest  efficiency.     The 
workingman  is  skilled  in  his  trade;  he  is  a  specialist. 
The  man  in  the  planning  department  is  skilled  in 
analysis,  and  he  also  is  a  specialist.     The  duty  of  the 
planning  department  is  to  find  "the  one  best  way"  for 
doing  a  thing  before  a  cent  has  been  spent  in  either 
labor  or  material.     It  designs  the  job,  prepares  proper 
details  and  drawings,  analyzes  the  work  in  its  various 
elements,  and  routes  it  in  its  future  progress  thru  the 
office,  store  or  shop.     It  is  easily  seen  that  when  this  is 
done  the  greatest  part  of  the  work  has  been  accom- 
plished, for  planning  means  brain  work.     The  sav- 
ings made  after  the  introduction  of  such  a  department 
are  not  always  of  the  spectacular  kind,  such  as  were 
effected  when  the  new  tool  steels  were  first  introduced ; 
nevertheless  the  gains  are  important  even  tho  they  are 
made  up  of  innumerable  small  savings. 

10.  Planning  and  overhead  expense. — The  chief  ob- 
jection offered  by  many  managers  to  the  introduction 
of  the  planning'  department  is  the  added  overhead  ex- 


PLANNING  IN  MANAGEMENT  147 

pense.  They  look  upon  all  planning  expense  as  non- 
productive, and  when  it  means  that  there  shall  be  one 
man  for  the  planning  department  for  every  three  to 
five  men  in  the  operating  department  the  proposition 
appeals  to  them  as  absurd.  Besides  this,  the  outlay 
for  printed  forms  and  office  supplies  is  largely  in- 
creased. But  before  judgment  is  passed  it  is  well  to 
look  at  the  results.  If  the  total  net  cost  is  not  in- 
creased it  makes  little  difference  whether  the  money  is 
spent  on  producers  or  on  the  so-called  noriproducers. 
In  the  case  presented  by  Mr.  Hathaway  the  total  num- 
ber of  men  employed  under  the  new  system  is  not 
more  than  that  employed  under  the  old  system.  They 
were  simply  distributed  differently.  Under  the  old 
system  he  employed  125  men  in  the  operating  end  and 
two  clerks  in  the  office.  With  the  planning  depart- 
ment added,  he  now  has  100  men  in  the  shop  and  25 
in  the  planning  room. 

11.  Overhead  actually  reduced  per  unit. — T^he 
overhead  charges  naturally  increased  but  they  were 
far  from  being  "nonproductive."  The  product 
turned  out  was  three  times  what  it  was  before  this 
new  aid  to  the  management  was  added.  Such  an 
outcome  simply  puts  the  addition  of  a  planning  de- 
partment on  the  basis  of  any  other  investment.  It  is 
in  reality  spending  money  looking  to  future  increased 
returns.  Mr.  Parkhurst  claimed  that  for  a  shop  em- 
ploying a  few  hundred  men,  only  about  six  additional 
employes  in  the  new  planning  department  were  nec- 
essary. The  cost  for  the  six  additional  men,  in  wages, 


148     FACTORY  AND  OFFICE  ADMINISTRATION 

totaled  about  $4,000  a  year.  For  additional  sta- 
tionery, office  room,  etc.,  this  sum  was  increased  by 
$1,000.  But  this  change  brought  about  a  doubling  of 
output,  not  to  mention  the  permanent  assistance  ob- 
tained by  the  manager  thru  having  at  hand  a  force  of 
men  investigating,  collecting  and  utilizing  knowledge 
which  he  could  not  possibly  get  unaided. 

12.  Evolution  of  the  planning  department. — The 
organization  of  the  planning  department  is  a  natural 
evolution  of  much  interest  to  the  student  of  manage- 
ment. Under  the  traditional  system  of  management 
the  foreman  and  workingmen,  after  deciding  in  a  gen- 
eral way  what  the  work  was,  put  the  job  into  the 
shop  and  studied  how,  when  and  where  it  was  to  be 
done  after  the  operation  had  been  set  in  motion.  It 
is  perfectly  evident  to  most  managers  today  that  it  is 
not  safe  to  trust  the  planning  of  what  is  to  be  done  to 
the  men  who  are  to  supervise  the  execution  of  the 
work.  But  it  took  many  years  before  the  establish- 
ment of  the  drafting  department  was  considered  any- 
thing else  than  an  extra  expense  or  burden.  Just  as 
the  planning  of  what  was  to  be  done  before  the  work  is 
put  into  the  shop  was  found  to  be  even  more  economi- 
cal when  put  into  the  hands  of  experts,  so  it  will  be 
found  that  there  will  be  even  greater  savings  when 
the  planning  of  how,  when  and  where  the  work  shall 
be  done  is  taken  from  the  shoulders  of  the  foreman 
and  the  men  in  the  shop,  and  is  put  in  a  special  de- 
partment called  the  planning  department.  It  will 
be  seen  at  once,  therefore,  that  nothing  is  done  in  the 


PLANNING  IN  MANAGEMENT  149 

planning  department  that  does  not  have  to  be  done  by 
someone  in  the  place,  under  any  scheme  of  manage- 
ment. Some  workmen  are  good  at  planning  their 
work,  but  others  are  not.  Thus,  it  appears  that  if  the 
best  man  in  this  respect  is  selected  for  the  planning, 
all  the  less  efficient  men  will  get  the  advantage  of  his 
greater  sagacity. 

13.  Thoughtful   plans  make   valuable   records. — 
Not  long  after  such  a  man  is  put  in  full  charge  it 
is  found  that  the  advantage  gained  is  not  alone  that 
resulting  from  his  superior  intelligence.     The  com- 
pany soon  accumulates  classified  and  recorded  data 
which  become  a  source  of  knowledge  in  planning  the 
best  methods,  greater  than  that  furnished  by  any  in- 
dividual man's  experience. 

14.  Planning   movements  and  operations. — It   is 
easy  to  show  the  advantage  of  planning  ahead  in  order 
to  provide  necessary  materials,  tools  and   supplies, 
but  to  make  men  see  that  it  is  just  as  necessary  to  plan 
the  movements,  operations,  etc.,  ahead  is  more  diffi- 
cult.    Where  this  has  been  done,  however,  further 
subdivisions  of  the  work  of  the  planning  department 
are  necessary.     This  work  is  of  two  general  kinds, 
planning  how  each  job  is  to  be  done,  and  planning 
when  it  is  to  be  done.     Concerned  with  the  how  are 
the   following  specialists:   route  clerks,   instruction- 
card  men  and  time-study  men.     Concerned  with  the 
when  are  the  production  clerks  and  the  order-of-work 
clerks.     It  was  soon  found,  however,  in  shops  making 
a  diversified  product  that  still  further  subdivision  of 


150     FACTORY  AND  OFFICE  ADMINISTRATION 

the  work  in  the  planning  department  must  be  made. 
Accordingly,  we  find  such  men  as  recording  clerks, 
balance-of-stores  clerks,  foundry  clerks,  clerks  who 
write  up  the  numerous  details,  make  out  orders,  tags, 
etc.,  time-keeping  and  cost-keeping  clerks,  and  various 
others. 

15.  Proportion  of  planners  to  doers. — The  ques- 
tion of  how  many  of  these  men  will  be  needed  in  the 
planning  department  depends  entirely  on  the  nature 
of  the  specific  business.  Some  businesses  will  require 
two  or  more  men  for  each  of  the  positions,  whereas 
in  others  two  or  more  of  the  functions  may  be  put 
under  the  direction  of  one  man.  In  one  shop,  for  in- 
stance, employing  several  hundred  men,  four  clerks 
in  the  planning  department  handle  all  the  work,  while 
in  another  concern,  employing  only  about  one  hun- 
dred men,  twenty-five  clerks  are  necessary.  The  first 
concern  manufactures  a  limited  variety  of  products 
in  large  quantities  from  standard  designs;  the  sec- 
ond concern  manufactures  a  great  variety  of  goods 
in  small  quantities,  and  with  frequent  necessary 
changes  in  their  design.  In  the  first  case  a  man  at  a 
machine  may  run  on  the  same  job  or  on  similar  jobs 
for  a  month,  whereas  in  the  second  concern  each  work- 
man is  employed  on  three  or  four  different  jobs  every 
day.  It  will  be  seen  at  once,  therefore,  that  a  descrip- 
tion of  any  one  planning  department  will  be  incom- 
plete, but  for  our  purpose  it  is  best  to  take  the  more 
complex  form,  where  the  duties  of  the  various  men 
have  been  clearly  differentiated  and  put  into  the  hands 


PLANNING  IN  MANAGEMENT  151 

of  individual  persons.  This  will  make  the  explana- 
tion simpler  and  more  comprehensible,  since  each 
function,  in  such  a  scheme,  will  have  an  individual  man 
to  carry  it  out. 

Perhaps  the  organization  of  the  department  can  be 
most  easily  understood  if  we  take  up  the  duties  of 
each  clerk  as  they  arise  in  planning  for  a  manufac- 
turing order.  Each  man  in  turn  will  receive  this 
order  and  work  out  the  plans  which  come  under  his 
jurisdiction. 

REVIEW 

An  employe  suggests  to  his  superior  officer  a  plan  which  in- 
volves extensive  changes  in  the  organization.  The  suggestion 
is  "turned  down"  without  comment.  What  allowance  should  the 
employe  make  for  the  officer's  attitude? 

Would  an  organization  chart  help  an  employe  who  wished  to 
present  to  his  chief  plans  for  the  improvement  of  his  depart- 
ment ? 

What  is  meant  by  organization  records? 

It  is  conceded  by  experts  in  organization  that  a  planning  de- 
partment increases  the  amount  of  clerical  help  necessary  to  carry 
out  the  work  along  the  lines  laid  down  by  scientific  management. 
What  argument  will  offset  the  one  implied  in  the  above  state- 
ment, namely,  that  overhead  expenses  are  unduly  augmented? 

Is  a  planning  department  an  absolute  innovation  in  the  factory 
or  office? 


CHAPTER  XII 

PLANNING  PRODUCTION— THE  FACTORY 

1.  Planning  department  of  a  factory. — In  choos- 
ing an  example  to  show  the  methods  followed  in  the 
planning  department  of  a  factory  we  may  select  an 
engineering  enterprise.     Here  the  work  is  more  mi- 
nutely subdivided  than  in  other  enterprises  and  affords 
better  opportunity  to  study  the  detail  of  the  planning 
organization.     In  such  a  concern  we  find  the  follow- 
ing positions:  (1)  production  clerk,  (2)  route  clerk, 
(3)   foundry  clerk,   (4)   balance-of -stores  clerk,   (5) 
instruction-card  clerk,  (6)  route-file  clerk,  (7)  order- 
of-work  clerk,  (8)  recording  clerk,  (9)  mail  carrier, 
(10)    tickler  clerk,    (11)    time-and-cost  clerk,    (12) 
stenographers,  messengers,  etc.1 

2.  Coordinating  duties  of  production  clerk. — As 
soon  as  the  process  of  specialization  has  divided  the 
duties   of  one  man  or  of  one   department  among 
several  men  or  several  departments  the  chief  prob- 
lem of  management  is  to  bring  about  an  efficient 
cooperation   among   the   various   parts   which  have 
thus  been  separated.     When  an  enterprise  grows 
to  anything  like  normal  proportions,  it  is  necessary 

i  It  must  not  be  assumed,  however,  that  this  sequence  is  absolutely 
necessary.     There  are  cases  where  several  of  these  functions  may  be  per- 
formed at  the  same  time;  that  is,  two  or  more  of  these  clerks  may  be 
working  out  their  plans  at  the  same  time. 
152 


PLANNING  PRODUCTION  153 

to  separate  the  sales  department  from  the  manufac- 
turing department.  No  sooner  is  this  division  made, 
however,  than  difficulties  arise.  The  sales  depart- 
ment sends  in  orders  and  expects  the  manufacturing 
department  to  get  them  out  on  schedule  time.  As 
every  business  man  knows,  these  expectations  are  not 
uniformly  realized,  and  friction  results.  A  reduction 
of  this  friction  and  the  bringing  about  of  a  greater 
amount  of  cooperation  between  these  two  depart- 
ments is  one  of  the  chief  functions  of  the  production 
clerk.  He  is  in  a  true  sense  a  coordinator,  the  con- 
necting link  between  the  sales  force  and  the  shop. 
The  sales  department  depends  upon  him  for  informa- 
tion upon  which  to  base  its  promises  of  delivery.  He 
is,  in  fact,  responsible  to  the  sales  department  for 
making  these  deliveries  at  the  time  promised. 

3.  Setting  sales-delivery  dates. — To  set  his  dates, 
however,  the  production  clerk  must  have  information 
other  than  that  supplied  by  the  sales  department. 
He  therefore  first  consults  the  stores  clerk  and  learns 
what  manufactured  articles  are  required  for  stock. 
With  this  in  mind  he  then  sets  to  work  to  prepare  a 
schedule,  or,  as  it  is  called,  an  order  of  work.  This 
schedule  contains  a  list  of  all  orders  in  hand  for  each 
department,  arranged  according  to  their  relative  im- 
portance. The  importance  of  an  order  is,  of  course, 
determined  by  many  conditions,  but  in  general  the 
classes  into  which  most  of  the  manufacturing  orders 
may  fall  are  as  follows:  (1)  the  emergency  work, 
(2)  tools  or  appliances,  (3)  manufacturing  orders, 


154     FACTORY  AND  OFFICE  ADMINISTRATION 

(4)  orders  for  stock  parts,  (5)  orders  for  stock  ma- 
chines. As  soon  as  an  order  comes  to  the  production 
clerk,  he  classifies  it  under  one  of  the  above  divisions. 

4.  Relative  importance  of  orders. — It  need  hardly 
be  said  that  the  emergency  job  has  the  right  of  way 
thru  the  factory  in  preference  to  any  other  job.     But 
the  production  clerk  must  consult  the  manager  before 
an  order  can  be  placed  under  the  emergency  class. 
An  order  in  class  2  would  have  preference  over  any 
orders  of  the  later  classes,  for  such  an  order  would 
arise  only  when  the  work  under  way  was  being  held 
up  because  of  a  broken  tool  or  a  lack  of  appliances, 
etc.     Class  3  comprises  all  those  orders  for  products 
not  carried  in  stock,  but  which  must  be  made  up  after 
the  customer's  order  has  been  received.     This  class 
may  be  further  subdivided  into  definitely  dated  orders 
and  orders  which  can  run  on  and  be  completed  at  the 
manufacturer's  convenience. 

At  regular  intervals  whenever  the  need  arises  the 
production  clerk  revises  the  order  of  work  for  each 
department. 

5.  Further  duties  of  production  clerk. — The  sched- 
ule having  been  made  out,  the  production  clerk  must 
see  that  its  requirements  are  observed  in  the  drafting 
room,  in  the  planning  department  itself  and  in  the 
shop.     In  fact,  his  duties  now  are  largely  those  of 
"checking  up."     Having  fixed  a  date  for  the  com- 
pletion of  the  job,  and  having  placed  the  date  on  the 
shipping  order,  he  files  the  memorandum  away  in  the 
tickler.     When  the  date  arrives  for  this  job  to  be 


PLANNING  PRODUCTION  155 

started,  his  record  appears  automatically  and  he 
checks  up  the  drafting  department  by  it.  A  like 
method  is  pursued  in  checking  up  the  planning  and 
the  delivery  of  materials.  The  tickler  is  to  the  pro- 
duction clerk  what  a  cab  window  is  to  an  engineer  on 
a  locomotive;  both  men  must  be  constantly  looking 
ahead  to  assure  themselves  that  the  track  is  clear.  If 
obstructions  appear  the  production  clerk  must  ar- 
range to  have  them  removed  in  plenty  of  time  so  that 
they  may  not  interfere  with  the  general  order  of  pro- 
duction. 

6.  Aids  that  lighten  the  production  clerk's  task. — 
In  watching  the  progress  of  the  work  thru  the  shop, 
the  production  clerk  has  further  aids  to  help  him  in  de- 
tecting things  that  go  wrong  or  that  may  go  wrong. 
These  are  the  route  sheet,  the  progress  sheet  and  the 
bulletin  board.  The  method  by  which  the  production 
clerk  checks  up  the  progress  of  the  work  in  the  shop 
is  interesting  because  it  differs  so  widely  from  the 
practice  in  common  use.  His  mind  is  continually  on 
the  promise  he  has  made  to  the  sales  department,  that 
upon  a  certain  date  a  certain  delivery  will  be  made. 
He  therefore  begins  his  daily  checking  up  of  the 
progress  of  work  not  by  first  looking  up  the  orders 
due  to  be  shipped  today,  or  those  overdue,  but,  on  the 
contrary,  by  starting  at  the  bottom  of  the  list  and 
making  sure  that  everything  necessary  to  the  com- 
pletion of  the  order  just  received  is  on  time  and  is 
being  carried  out  to  the  letter.  He  works  up  the  list 
instead  of  down,  and  the  last  item  to  receive  his  atten- 


156      FACTORY  AND  OFFICE  ADMINISTRATION 

tion  is  the  order  which  is  to  be  shipped  immediately. 
Mr.  H.  K.  Hathaway,  in  the  Engineering  Digest  for 
July,  1912,  says: 

The  principal  cause  of  the  failure  to  complete  orders  on 
time  is  that  little  or  no  attention  is  given  them  on  this  score 
until  the  date  of  shipment  approaches.  In  machine  shops  a 
great  deal  of  time  is  ordinarily  wasted  in  getting  drawings 
and  patterns  made,  and  getting  materials  into  the  shop. 
This  time  cannot  be  made  up  after  the  work  is  started,  and 
the  effort  to  do  so  results  in  confusion,  decreases  the  efficiency 
of  the  plant,  and  causes  more  or  less  friction  among  the 
individuals  comprising  the  organization. 

7.  Qualifications  for  the  head  of  this  department. — 
The  production  clerk  need  not  necessarily  be  a  man 
trained  in  the  technic  of  the  particular  business  which 
he  serves;  if  he  is  in  the  planning  department  of  an 
engineering  concern,  however,  it  will  be  much  to  his 
advantage,  and  add  to  his  efficiency,  if  he  has  had 
two  or  three  years'   shop-practice  experience.     Of 
course,  he  must  be  familiar  with  the  processes  of  man- 
ufacturing, for  these  determine  when  a  certain  oper- 
ation is  to  be  done.     It  may  also  be  well  to  mention 
here  that  the  authority  of  the  production  clerk,  like 
that  of  all  other  members  of  this  department,  is  su- 
preme in  his  own  field.     Even  the  manager  or  super- 
intendent must  respect  his  authority.     But  when  he 
has  planned  the  time  when  certain  work  shall  be  done, 
his  authority  ceases.     Beyond  this  he  has  no  right  to 
say  what  shall  be  done  or  how  it  shall  be  done. 

8.  Route  clerk. — The  function  of  the  route  clerk  is 
to  show  how  a  thing  is  to  be  done.     As  soon  as  the 


PLANNING  PRODUCTION  157 

drafting  department  has  shown  what  is  to  be  done,  the 
planning  of  the  work  proceeds  to  the  route  clerk.  It 
is  his  duty  to  take  the  information  which  comes  to  him 
in  the  form  of  drawings  and  bills  of  materials  and  plan 
how  the  product  shall  be  made.  He  must  be  able  to 
read  readily  the  drawings  from  the  drafting  depart- 
ment ;  he  must  understand  machine  construction,  so  as 
to  be  able  to  analyze  it  and  put  in  writing  or  in  chart 
form  the  methods  which  show  how  the  manufacture 
is  to  be  carried  out  in  the  shop.  Furthermore,  he 
must  be  thoroly  familiar  with  the  location  and  capac- 
ity of  all  the  machines,  so  that  his  routing  of  the  mate- 
rial may  be  the  most  efficient  possible. 

9.  Method  of  work  for  the  route  clerk. — In  prepar- 
ing his  outline  or  his  diagram,  the  route  clerk  proceeds 
about  as  follows:  (1)  Having  analyzed  the  con- 
struction of  the  machine  he  divides  it  up  into  groups 
or  parts.  (2)  He  studies  the  length  of  time  it  will 
require  to  get  the  castings  or  various  parts  that  call 
for  special  construction,  and  the  amount  of  time  nec- 
essary to  work  up  the  various  parts  and  assemble 
them.  Knowledge  of  these  points  enables  him  to  de- 
cide the  relative  importance  of  the  various  groups, 
and  with  this  scale  or  order  of  importance  in  mind  he 
is  enabled  to  lay  out  the  first  draft  of  his  chart  or 
diagram  which  embraces  only  the  individual  groups. 
(3)  Each  group  is  now  considered  separately  and  a 
special  diagram  or  route  chart  is  made  of  it.  This 
will  include,  in  their  order  of  relative  importance,  all 
parts  that  go  into  the  order,  the  operations  to  be  per- 


158     FACTORY  AND  OFFICE  ADMINISTRATION 

formed  upon  them,  the  machines  that  are  to  perform 
the  various  operations  and  the  material  required  for 
each  part,  with  a  note  whether  it  is  to  be  purchased 
from  the  outside,  made  especially  for  the  job,  or  to 
come  from  stores.  (4)  He  applies  to  each  part  a 
suitable  symbol.  This  identifies  the  part  as  it  goes 
thru  the  shop,  indicates  what  part  of  the  machine  it 
belongs  to,  and  serves  as  an  operation  order-number 
and  an  index  to  the  instruction  card  which  is  made 
out  for  the  several  operations.  In  fact,  this  symbol 
is  used  in  connection  with  all  the  processes  involved 
in  the  manufacture  and  planning  of  this  job,  at  length 
serving  the  cost  keeper  in  compiling  his  records,  and 
finally  becoming  a  basis  for  filing  any  data  which  may 
pertain  to  the  piece  that  the  symbol  represents.  (5) 
Under  instructions  from  the  route  clerk,  another  clerk 
prepares  route  sheets  and  progress  sheets  upon  which 
the  movement  of  the  work  thru  the  shop  is  recorded. 
In  fact,  it  is  here  that  the  various  operation  orders,  in- 
spection orders,  stores  issues,  etc.,  originate. 

The  work  of  the  route  clerk  in  a  large  plant  be- 
comes very  involved,  and  requires  that  the  duties  of 
the  office  be  subdivided.  Thus  there  will  often  be 
found  one  expert  who  gives  his  whole  time  to  the 
making  of  route  charts  pertaining  to  the  assembling 
alone.  Other  experts  will  be  engaged  solely  in  lay- 
ing out  the  machine  operations  for  the  various  parts ; 
others  again  will  compute  the  quantities  of  material 
required,  and  the  like. 

10.  Qualifications  of  route  clerk. — Any  man  who 


PLANNING  PRODUCTION  159 

is  put  in  a  position  where  he  must  show  other  men 
how  things  are  to  be  done,  should  be  endowed  with 
much  tact.  Especially  is  this  true  of  the  route  clerk, 
who  must  consult  daily  with  the  foremen  in  the  shop, 
seeking  their  advice  as  to  the  best  method  to  be  fol- 
lowed in  machining  various  parts  and  assembling  them 
into  groups,  etc.  Even  in  the  planning  room  itself 
he  must  be  in  continual  conference  with  the  various 
clerks  of  the  department.  It  is  the  time-study  and 
instruction-card  men  who  can  tell  him  which  machines 
and  what  laborers  can  perform  the  work  in  the  most 
economical  manner,  whereas  the  balance-of-stores 
clerk  can  inform  him  of  the  condition  of  the  material 
and  supplies. 

11.  Special-material    ( foundry)    clerk. — Concerns 
that  do  a  variety  of  work  and  do  not  keep  all  the 
materials  on  hand,  find  it  necessary  to  order  the  special 
material  from  outside.     In  cases  where  this  is  done 
continually,  a  clerk  is  provided  to  look  after  the  spe- 
cial work  in  the  planning  department.     He  is  fre- 
quently called  the  special-material  clerk,  but  in  ma- 
chine shops  where  the  special  material  referred  to  is 
largely  made  up  of  castings  which  must  be  obtained 
from  some  outside  foundry,  he  is  spoken  of  as  the 
foundry  clerk. 

12.  Duties  of  foundry  clerk. — The  foundry  clerk's 
duties  do  not  call  for  a  man  trained  in  the  technic  of 
the  manufacturing  business,  but  they  do  require  a  man 
who  is  wide-awake ;  because  special  work  of  this  kind, 
especially  if  it  is  in  connection  with  the  foundry,  in- 


160      FACTORY  AND  OFFICE  ADMINISTRATION 

volves  the  care  of  a  great  number  of  patterns.  The 
first  duty  then  of  the  special-material  clerk  is  to  see 
that  the  patterns  are  stored  and  labeled  properly.  He 
must  know  whether  they  are  in  storage  or  whether 
they  are  at  the  foundry.  The  records  will  show  when 
patterns  were  delivered  and  when  returned.  His 
next  general  duty  is  to  make  out  detailed  orders  on 
the  foundry,  and  these  orders  it  is  his  further  duty 
to  follow  up  closely.  Each  order,  therefore,  is  care- 
fully scheduled;  it  shows  the  amount  wanted,  when 
wanted  and  the  number  in  each  lot.  It  has  been 
found  that  the  checking  up  of  these  lots  when  they  are 
delivered  from  the  foundry  is  a  very  important  thing, 
since  the  foundry  must  deliver  the  full  number  in  each 
lot  if  the  job  is  to  be  complete  before  any  order  is 
begun. 

Anyone  familiar  with  the  common  shop  methods, 
where  special  materials  are  often  delivered  in  broken 
lots,  will  easily  see  where  such  a  foundry  clerk  will 
soon  earn  his  salary.  Without  him,  jobs  are  started 
when  only  a  part  of  the  material  is  on  hand,  only  to  be 
dropped  again  when  the  supplies  run  out.  This  often 
requires  the  machine  to  lie  idle  for  a  long  time  or  to  be 
reset.  Altho  this  position  is  purely  a  clerical  one,  it 
requires  much  energy,  because  the  clerk  must  see  that 
material  is  in  the  shop  on  time. 

13.  Balance-oj '-stores  clerk,  a  unique  feature. — The 
taking  of  the  "stores  balance  sheets"  out  of  the  store- 
room and  putting  them  into  the  planning  department 
is  one  of  the  unique  features  of  the  planning  depart- 


PLANNING  PRODUCTION  161 

merit.  The  clerk  who  has  charge  of  this  department 
is  called  the  balance-of-stores  clerk.  His  chief  duty 
is  to  keep  a  running  inventory  of  each  article  carried 
in  stock.  His  records  are  kept  on  what  are  known  as 
"balance  sheets."  The  chief  items  which  this  clerk 
must  look  after  are  indicated  on  the  sample  sheet 
(Fig.  12)  on  page  162.  In  brief  they  are:  (1)  the 
maximum  and  the  minimum  quantity,  (2)  the  actual 
quantity  carried  in  the  stores,  (3)  the  quantity  on 
order  but  not  yet  received  in  stores,  (4)  the  quantity 
required  for  orders  for  shipment  or  manufacture  to 
which  they  have  been  apportioned  but  not  yet  issued, 
(5)  the  quantity  available  for  future  requirement. 

14.  Major  and  minor  duties  of  balance-of-stores 
clerk. — The  detailed  duties  of  the  balance-of-stores 
clerk  will  be  indicated  by  these  items  themselves.  He 
will  have  various  forms  to  make  out,  such  as  orders  on 
the  storeroom  as  soon  as  the  route  clerk  hands  to  him 
his  route  chart  and  bill  of  materials.  Altho  these 
duties  are  largely  those  of  a  bookkeeper,  nevertheless 
there  are  others,  such  as  checking  the  balance  sheet 
against  the  actual  stores,  which  call  for  considerable 
expertness  in  the  classification  of  the  various  orders 
according  to  their  symbols,  since  the  stores  orders  are 
returned  to  the  balance-of-stores  clerk  at  the  end  of 
each  day  by  the  storeroom  clerk. 

Of  course  it  is  this  clerk's  duty  to  inform  the  pro- 
duction clerk  as  soon  as  the  supply  of  stock  parts  be- 
gins to  run  low;  and  in  case  any  of  the  materials  are 
not  available  at  the  time  of  the  apportionment,  he 


162     FACTORY  AND  OFFICE  ADMINISTRATION 


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PLANNING  PRODUCTION  163 

must  also  notify  the  proper  authority  in  the  planning 
department  when  the  material  arrives,  so  that  orders 
may  be  issued  for  the  work  to  be  started. 

15.  Time-study  clerk. — Since  the  function  of  time- 
studies  will  be  taken  up  later,  it  will  not  be  necessary 
to  say  more  here  about  the  duties  of  the  time-study 
clerk  except  that  he  must  make  such  elementary  time- 
studies   as   are   necessary   in   determining   the   best 
methods  to  be  followed  in  the  performance  of  each 
class  of  work. 

16.  Instruction-card  clerk. — The  man  who  holds 
the  position  of  instruction-card  clerk  should  have  a 
high  appreciation  of  the  importance  of  detail.     This 
office  is  often  combined  with  that  of  the  time  clerk 
because  so  much  of  the  work  of  the  instruction-card 
clerk  depends  upon  knowledge  obtained  from  the 
time-study.     His  duty,  clearly  indicated  by  his  title, 
is  to  prepare  instruction  cards  showing  the  method  to 
be  followed  in  the  performance  of  each  operation, 
what  tools  are  to  be  used,  in  what  sequence  the  opera- 
tions should  be  performed,  the  time  to  be  taken  for 
each  operation,  etc. 

17.  Route- file  clerk. — When  the  route  clerk  has 
finished  his  sheet  and  diagram,  he  passes  them  over  to 
the  route-file  clerk,  whose  duty  it  is  to  transfer  the 
information  from  these  route  sheets  to  suitably  sized 
slips  of  paper,  tags,  etc.,  whereby  the  route  clerk's 
information  can  be  carried  to  the  storeroom,  the  shop 
and  the  various  other  places  connected  with  the  per- 
formance of  the  work.     For  example,  there  will  be 


164     FACTORY  AND  OFFICE  ADMINISTRATION 

an  order  on  the  storeroom  for  material  from  which  the 
article  is  to  be  made,  a  tag  to  be  attached  to  the  lot  or 
part,  an  order  for  each  operation,  for  the  inspection 
that  takes  place  at  the  start  of  each  operation,  for  the 
inspection  of  the  work  when  it  is  completed  on  the  lot, 
and  for  moving  the  materials  from  one  place  to  an- 
other. 

These  forms  are  made  out  for  each  unit  into 
which  the  work  has  been  divided  by  the  route  clerk. 
An  envelop  sheet,  bearing  its  appropriate  symbol 
whereby  it  can  be  easily  recognized,  is  then  prepared. 
In  this  are  placed  the  operation  orders,  etc.,  pertaining 
to  that  unit.  The  envelop  sheet  is  then  filed  for 
the  use  of  the  record  clerk,  whose  work  begins  as  soon 
as  the  work  on  this  job  starts. 

18.  Order-of-work  clerk. — Altho  the  route  clerk 
has  already  shown  how  and  where  the  work  is  to  be 
done,  nevertheless  it  requires  another  man  to  adminis- 
ter the  order  of  work  to  the  employes  in  the  shop ;  the 
medium  which  he  uses  is  the  bulletin  board. 

As  soon  as  the  job  is  ready  to  be  put  into  the  shop, 
the  record  file  is  taken  from  its  place  and  the  various 
operation  orders  are  removed  and  placed  in  the  pos- 
session of  the  order-of-work  clerk.  Being  thoroly 
familiar  with  the  work  of  the  plant,  he  knows  the  ca- 
pacity of  both  men  and  machines.  He  sees  that  the 
various  jobs  ahead  of  each  machine  are  taken  up  and 
performed  in  accordance  with  their  relative  impor- 
tance. In  deciding  this  he  is,  of  course,  guided  by 
the  schedule  furnished  him  by  the  production  clerk, 


PLANNING  PRODUCTION  16o 

already  mentioned.  On  the  bulletin  board,  therefore, 
will  be  displayed  notice  of  each  job  and  of  the  ma- 
chine to  which  it  is  assigned.  Furthermore,  it  can  be 
seen  at  once  whether  the  job  is  being  worked  upon, 
whether  it  is  to  be  done  next,  as  soon  as  the  job  under 
way  has  been  finished,  or  whether  it  stands  further 
down  on  the  list. 

Besides  having  a  good  memory,  this  clerk  must  also 
be  endowed  with  considerable  tact,  since  he  must  se- 
cure much  of  his  information  from  the  various  fore- 
men and  inspectors  in  the  shop.  Thru  his  contact 
with  them  he  keeps  continually  informed  as  to  the  best 
workmen  and  the  capabilities  of  the  various  machines, 
as  well  as  to  the  grades  of  work  which  each  is  capable 
of  performing. 

19.  The  eye  of  the  superintendent. — Without  go- 
ing into  the  shop,  therefore,  the  superintendent  can 
see  in  advance  what  machines  and  what  men  are  occu- 
pied. If  for  any  reason  the  order-of-work  clerk  does 
not  find  work  for  some  of  the  men,  he  must  at  once  no- 
tify the  superintendent  or  whoever  is  the  proper  per- 
son. It  will  also  be  his  duty  to  inform  the  proper 
authority  in  case  there  are  not  enough  men  to  handle 
the  work  which  is  already  on  the  floor  or  which  is 
planned  for  some  particular  period.  The  bulletin 
board  referred  to  is  the  most  important  device  in 
the  planning  department;  it  will  be  described  later, 
when  the  routing  of  an  order  thru  the  shop  is  taken 
up. 

The  order-of-work  clerk  is  a  very  active  person. 


166     FACTORY  AND  OFFICE  ADMINISTRATION 

He  must  continually  and  systematically  go  over  his 
bulletin  board.  He  must  permit  neither  man  nor 
machine  to  run  short  of  work  if  it  can  be  provided, 
nor  must  he  permit  an  important  job  to  stand  waiting 
while  one  that  is  less  important  is  being  worked  upon. 
The  great  economy  effected  by  the  bulletin  board  is 
the  saving  of  the  time  generally  lost  between  the  com- 
pletion of  one  job  and  the  starting  of  the  next,  the  rule 
being  to  have  preparations  made  in  the  plant  for  two 
or  more  jobs  ahead  for  each  workman. 

20.  The  recording  clerk. — On  the  route  sheet,  each 
step  in  the  progress  of  the  work  to  be  done  on  a  lot 
or  part  is  indicated,  so  that  what  has  been  done  and 
what  remains  to  be  done  is  always  evident.     Each 
step  and  the  time  it  is  to  be  taken  are  clearly  indi- 
cated.    Along  with  this  information,  which  has  been 
filed  in  the  envelop  sheet  by  the  route-file  clerk,  comes 
also  other  important  information,  such  as  the  tool 
list,  instruction  cards,  designs,  etc.     Upon  the  infor- 
mation thus  provided  the  record  clerk  performs  his 
functions,  which  are  mainly  to  record  the  progress  of 
the  work,  to  issue  and  receive  operation  orders,  in- 
spection orders,  move  orders,  etc.,  at  each  phase  in 
the  progress  of  the  work. 

21.  The  cost  clerk. — The  cost  clerk  is  held  responsi- 
ble for  all  cost  records.     A  system  of  management 
which  employs  a  planning  department  uses  its  cost 
records  for  two  purposes:  (1)  for  keeping  the  records 
of  the  work  which  has  been  done  during  various 
periods  of  the  past;  (2)  to  show  the  condition  of  the 


PLANNING  PRODUCTION  167 

work  at  any  particular  period  when  a  report  is  called 
for  by  the  manager.  The  operation  orders,  and  other 
slips  which  are  used  in  the  administration  of  the  opera- 
tions in  the  shop,  etc.,  at  length  become  the  basis  on 
which  the  work  of  the  record  clerk  rests.  As  a  job 
is  finished,  these  slips  recording  the  workingman's 
time,  his  rate  of  pay,  his  bonus,  etc.,  come  directly  to 
the  cost  clerk. 

22.  How  cost  sheets  are  kept  up  to  date. — Thus  all 
cost  sheets  are  kept  up  to  date.  All  labor  and  other 
charges  to  the  job,  at  the  close  of  work  each  night, 
must  be  posted  on  sheets  up  to  and  including  the  prog- 
ress of  the  day  previous.  The  division  of  the  cost 
clerk's  work,  mentioned  above,  forms  the  basis  for  a 
further  duty,  namely,  managing  the  cost  files.  These 
files  are  of  two  kinds:  (1)  the  live  file;  (2)  the  dead 
file.  Only  work  in  process  must  remain  in  the  live 
file.  When  work  is  completed,  ready  to  be  shipped, 
or  the  job  is  otherwise  closed,  the  slips  are  removed 
from  the  file  as  soon  as  the  cost  clerk  is  satisfied  that 
all  charges  that  belong  to  them  are  posted.  They  are 
then  put  in  the  dead  files  and  stand  as  records  for 
future  reference. 

The  cost  clerk  generally  has  an  assistant  who  fig- 
ures up  the  payroll  and  makes  out  the  bonus  rewards, 
etc.  The  cost  records  kept  under  a  system  of  this 
kind  are  very  simple.  All  materials,  requisitions  from 
stores  or  from  outside  places,  all  time  expended  in  the 
shop,  either  as  expense  or  as  work  in  process,  will  be 
posted  on  the  cost  sheet.  A  second  sheet,  known  as 


168     FACTORY  AND  OFFICE  ADMINISTRATION 

the  distribution-sheet,  will  then  show  all  the  time  as 
it  is  distributed  daily. 

23.  Duties   of  cost   clerk. — To   describe  the   full 
duties  of  the  cost  clerk  would  take  us  too  far  into 
the  field  of  accounting.     A  brief  summary  of  his 
duties,  as  laid  down  in  the  book  of  instructions  of  one 
large  company,  will  suffice : 

The  cost  clerk  should  make  it  a  point  to  close  daily  all  cost 
sheets  for  work  completed,  after  being  sure  that  all  the 
charges  for  these  jobs  have  been  received  and  posted  by  them. 
This  cost  includes  material,  labor  and  sundries  which,  totaled, 
represent  time  cost.  To  this  opposite  expense  must  be  added 
the  prevailing  overhead  burden  per  hour.  This  burden, 
added  to  the  time  costs,  represents  the  total  manufacturing 
costs.  Differential  burden  or  machine  hour  is  posted  in  each 
labor-operation  column.  Each  month  the  cost  clerk  must 
make  a  report  to  the  general  manager. 

24.  Timekeeper. — The  first  duty  of  the  time  clerk 
is  to  regulate  all  the  clocks  in  the  shop.     The  time- 
clocks  on  which  the  men  register  as  they  go  in  and 
out,  he  is  required  to  watch  closely.     Each  day  the 
clock  cards  are  checked  up  and  totaled,  the  total  being 
checked  against  the  individual  time-card  for  each  man 
and  turned  in  by  him  or  the  gang  boss  or  foreman  each 
day.     This  insures  the  proper  distribution  of  the 
exact  amount  of  time,  which  is  shown  by  the  time-clock 
card,  and  for  which  the  men  will  be  paid.     This  time 
is  totaled  daily  and  distributed  upon  the  distribution- 
sheet  mentioned  above  in  connection  with  the  cost 
clerk's  duties.     This,  of  course,  must  agree  with  the 
cost  clerk's  entries. 


PLANNING  PRODUCTION  169 

25.  Planning  introduces  no  new  duties. — It  was 
not  intended  in  the  foregoing  description  of  the  vari- 
ous duties  performed  in  the  planning  department,  to 
describe  all  the  activities  that  might  possibly  be  in- 
cluded in  a  planning  department.  The  description, 
however,  will  serve  to  show  that  there  are  no  new 
duties  or  functions  carried  out  in  the  planning  depart- 
ment which  have  not  previously  been  carried  on  in  the 
shop.  Those  duties  which  could  be  easily  separated 
from  the  purely  operative  functions  have  been  put  by 
themselves.  One  important  feature  of  this  form  of 
management  is  that  the  workmen  have  absolutely  no 
clerical  work  whatsoever  to  do  and  it  is  not  necessary 
that  they  touch  a  pencil  or  time-stamp,  from  the  time 
they  arrive  at  work  in  the  morning  until  they  stop  at 
night.  As  L.  M.  Gilbreth  says  in  a  paper  in  Indus- 
trial Engineering : 

Master  planning  is  the  last  study.  The  best  planner  is  he 
who — other  things  being  equal — is  the  most  ingenious,  the 
most  experienced  and  the  best  observer. 

The  art  of  observing  is  founded  upon  a  study  of  the  mental 
element.  In  order  that  planning  may  be  done  best,  the  entire 
sequence  of  operations  must  be  laid  out  previous  to  starting 
the  work,  so  that  the  ideas  and  values  of  every  element  of 
every  subdivision  of  the  process  of  work  may  be  corrected  to 
act  most  efficiently  in  relation  with  each  and  all  of  the  subse- 
quent parts  and  events  that  are  to  follow.  This  planning  for- 
ward and  backward  demands  an  equipment  of  time-study  and 
motion-study  records  such  as  can  be  used  economically  only 
when  all  the  planning  is  done  in  one  place,  with  one  set  of 
records.  The  planner  must  be  able  to  see  and  control  the 
whole  problem  in  all  of  its  aspects. 


170     FACTORY  AND  OFFICE  ADMINISTRATION 

26.  Other  functions  associated  with  planning  de- 
partment.— The  duties  of  the  disciplinarian,  gang 
boss,  speed  boss,  repair  boss  and  inspector  have  not 
been  touched  upon  here.  Altho  these  men  may  be 
put  into  the  planning  department,  they  are  more 
closely  allied  with  the  "performing  department." 
The  planning  department,  then,  in  contrast  with  the 
performing  department,  classifies  its  work  under 
seven  general  functions,  namely,  (1)  what  is  to  be 
done,  (2)  the  sequence  in  which  it  is  to  be  done,  (3) 
the  method  by  which  it  shall  be  done,  (4)  which  men 
shall  do  it,  (5)  the  time  that  it  will  take,  (6)  the 
exact  quality  of  product,  (7)  the  amount  of  addi- 
tional pay  that  will  be  given  for  doing  it.  The 
workers  are  given  standard  tasks  to  do.  They  have 
teachers  to  help  them,  and  as  a  reward  they  are  given 
a  standard  wage  according  to  the  performance.  The 
management,  knowing  what  the  planning  department 
is  expected  to  do,  is  also  in  full  possession  of  facts  as 
to  just  what  the  men  in  the  shop  are  expected  to  do. 
The  workers  are  expected:  (1)  to  give  their  cooper- 
ation in  carrying  out  prescribed  work,  method  and 
quality;  (2)  to  exercise  their  ingenuity  in  making 
improvements  after  they  have  learned  the  standard 
prescribed  practice;  (3)  to  fit  themselves  for  higher 
pay  and  promotion. 

REVIEW 

How  can  a  planning  department  in  a  factory  aid  the  sales 
department  in  keeping  delivery  dates? 


PLANNING  PRODUCTION  171 

What  training  or  preparation  would  be  necessary,  in  your  esti- 
mation, to  fit  a  man  to  become  a  production  clerk? 

Which  clerks  in  the  planning  department  are  least  necessary 
in  the  operation  of  the  plant? 

What  conditions  involved  in  manufacturing  make  it  desirable  to 
introduce  planning  departments  into  factories? 


CHAPTER  XIII 

PLANNING  THE  CLERICAL  WORK 

1.  Office  systems  often  haphazard. — Every  office  is 
started  with  a  plan ;  but  business  undertakings,  if  they 
prove  successful,  are  likely  to  grow  rapidly,  necessi- 
tating a  rapid  expansion  of  the  office.  Sooner  or 
later  the  office  system  breaks  under  the  strain,  and 
again  the  work  of  the  office  is  planned.  This  second 
planning  is  usually  spoken  of  as  a  "reorganization," 
since  several  old  employes  lose  their  positions,  a  few 
new  partitions  are  run  up,  a  new  filing  system  is 
adopted,  and  so  on.  Again  the  planning  ceases  and 
the  office  goes  on  its  way  until  a  new  catastrophe  calls 
attention  to  "needed  improvements."  Thus  most 
offices  today  are  made  up  of  accretions  of  clerks,  ma- 
chines, desks  and  departments  to  which  very  little  at- 
tention has  been  given  so  far  as  a  studied  division  of 
the  work  is  concerned. 

A  few  years  ago  it  was  generally  thought  that  all 
the  ills  of  office  administration  could  be  cured  by 
additions  of  new  machines,  or  a  new  "system,"  but  as 
the  size  of  the  business  increased,  the  number  and  va- 
riety of  machines  and  the  complexity  of  the  systems 
became  problems  in  themselves.  To  solve  these  prob- 
lems "systematizers"  were  engaged  to  straighten  out 

172 


PLANNING  THE  CLERICAL  WORK          173 

the  tangled  mass  of  activities  and  equipment.  As  in 
the  case  of  most  betterment  movements  of  this  kind, 
the  investigators  began  at  the  wrong  end  by  trying 
to  adjust  some  special  system  to  new  conditions  with- 
out a  thoro  study  of  the  local  requirements;  or  else 
they  made  an  equally  grievous  blunder  in  supposing 
that  the  system  when  once  installed  would  run  of  it- 
self. It  did  not  take  long  for  "system"  in  both  Eng- 
land and  America  to  become  associated  with  "fad- 
dism"  and  quackery. 

Here  and  there,  however,  a  large  insurance  com- 
pany, a  bank  or  a  big  mail-order  house  began  to  study 
its  office  problems  scientifically.  By  such  study,  the 
Metropolitan  Life  Insurance  Company  discovered 
that  a  contract  could  be  handled  in  two  or  three  hours 
instead  of  as  many  days.  The  Fourth  National  Bank 
of  New  York  made  similar  reductions  in  the  time 
necessary  to  handle  the  checks  coming  in  thru  the 
mail.  And  the  National  Cloak  and  Suit  Company 
by  means  of  a  series  of  time-studies  was  able  to  route 
its  orders  thru  the  office  on  a  regular  time-schedule 
permitting  orders  to  be  attended  to  the  same  day  they 
are  received.  But  systems  such  as  these  require  con- 
stant attention.  Spasmodic  planning  is  not  enough. 

2.  Working  toward  functional  control  in  the  o/- 
fice. — To  provide  for  the  constant  changes  which  are 
taking  place,  some  of  the  larger  companies  employ  an 
office  manager  whose  sole  duty  is  to  watch  and  plan 
the  office  work.  He  may  be  given  assistants,  but  the 
scheme  does  not  provide  for  a  regular  department 


174     FACTORY  AND  OFFICE  ADMINISTRATION 

where  planning  is  the  chief  function;  the  idea  that 
the  manager  is  the  "boss"  is  a  minor  consideration. 
Other  companies  attempt  to  modify  this  purely  mili- 
tary form  of  office  organization  by  introducing  some 
form  of  the  suggestion  system.  But  here  again  the 
responsibility  for  definite  and  continuous  planning  is 
lacking,  and  the  only  contribution  in  this  direction 
offered  by  the  suggestion  box  is  a  series  of  spasmodic 
suggestions — sometimes  called  "constructive"  be- 
cause the  manager  has  given  so  little  attention  to  the 
real  nature  of  his  office  that  everything  which  emerges 
above  the  mediocrity  of  daily  routine  "looks  good"  to 
him. 

Still  other  concerns  move  a  step  further  in  the  di- 
rection of  functional  control  by  adopting  some  form 
of  the  committee  system  of  management.  But  here, 
as  in  the  suggestion  system,  the  watching  and  study 
necessary  to  correct  the  organization  perspective  is 
lacking.  The  committee  system  has  its  peculiar 
merits  but  it  cannot  take  the  place  of  careful,  thought- 
ful planning. 

3.  Planning  department  for  the  office. — The  most 
recent  development  in  the  field  of  office  management 
is  the  planning  department.  This  development  is  in 
line  with  a  similar  movement  for  a  more  refined  spe- 
cialization in  administration  and  a  closer  control  of 
functional  activities  in  factory  and  shop. 

The  progress  of  this  movement  presents  an  inter- 
esting study.  Here  we  see  displayed  the  same  atti- 
tude of  mind  on  the  part  of  the  administrative  officers 


PLANNING  THE  CLERICAL  WORK          175 

as  in  the  case  of  the  planning  department  in  the  fac- 
tory. Each  man  is  inclined  to  say  that  the  logic  sup- 
porting the  argument  for  a  planning  department  is 
good  but  applies  to  the  "other  fellow,"  for  "my  busi- 
ness is  different."  But  while  this  attitude  is  evident 
among  managers  of  large  businesses,  they  never  per- 
sist in  it  so  long  as  the  managers  of  small  businesses. 
It  is  the  small  manager  who  first  refuses  to  entertain 
new  ideas,  with  the  argument  that  "my  business  is 
different,"  and  then  after  being  driven  from  this  de- 
fense, settles  down  into  his  trenches  behind  the  plea 
that  only  a  large  business  can  afford  the  luxury  of  a 
"thinking"  department;  and  from  this  position  the 
small  man  is  seldom  driven  out.  But  there  is  a  differ- 
ence between  holding  a  position  and  being  buried  in  it. 

4.  New  policies  involve  new  methods. — When  the 
equipment  of  an  office  was  made  up  of  quill  pens,  a 
high  desk  and  a  stool,  the  administration  of  an  office 
consisted  largely  in  the  distribution  of  work  among 
the  employes.  But  a  modern  office,  besides  being 
larger,  has  many  new  duties  connected  with  its  oper- 
ation. The  purchase,  installation  and  care  of  the 
office  machinery  is  almost  an  art  in  itself,  to  say  noth- 
ing of  the  constant  watchfulness  necessary  to  discover 
new  and  better  methods  while  guarding  against  the 
countless  importunities  of  salesmen  with  new  but  un- 
proved devices  and  systems. 

But  while  the  problems  pertaining  to  the  mechani- 
cal side  of  the  office  control  have  grown,  the  human 
element  presents  problems  never  dreamed  of  a  few 


176     FACTORY  AND  OFFICE  ADMINISTRATION 

decades  ago.  The  old  type  of  office  manager,  who 
based  his  control  on  ire  and  summed  up  his  two  func- 
tions by  adding  "h"  to  ire  when  he  wanted  a  new 
employe  and  "f"  to  ire  when  he  wanted  to  get  rid  of 
him,  is  very  different  from  the  modern  manager;  the 
latter  must  have  something  more  than  temper  for  his 
administrative  equipment.  Corporations  and  other 
business  organizations  have  now  generally  accepted 
as  a  part  of  their  plans  the  training  and  guiding  of 
their  employes,  as  well  as  the  careful  selection  of  them 
— all  of  which  involves  studied  methods  for  increasing 
efficiency  thru  better  physical,  mental  and  moral  sur- 
roundings. Office  management,  therefore,  has  grown 
in  importance  in  just  the  proportion  in  which  cooper- 
ation has  superseded  exploitation  in  administrative 
policies. 

5.  Function  I:  Keeping  the  organization  in  or- 
der.— Most  businesses,  no  matter  how  progressive, 
present  opportunities  for  improvement.  Rapid 
growth  generates  maladjustments  in  the  organiza- 
tion. Especially  is  this  true  of  the  office.  There- 
fore the  first  function  of  the  planning  department 
pertains  to  the  solution  of  problems  connected  with 
the  office  as  an  organization.  If  we  presuppose 
a  standard  of  organization  and  procedure  which  all 
employes  are  expected  to  know  and  observe,  the  first 
duties  of  the  planning  department  would  be  to  pro- 
vide a  systematic  means  of  keeping  in  touch  with  all 
technical  changes  in  the  organization  and  all  de- 
partures from  standard  practice.  This  requires  the 


PLANNING  THE  CLERICAL  WORK          177 

planning  department  to  be  in  touch  with  the  whole 
office  organization,  so  that  its  recommendations  and 
decisions  may  achieve  the  greatest  good  for  the  organ- 
ization as  a  whole.  Thus,  the  planning  department 
would  receive  information  from  individual  depart- 
ments and  would  offer  its  recommendations,  based  on 
first-hand  contact  with  all  departments,  to  the  head  of 
any  individual  department.  Even  if  the  functions  of 
the  planning  department  did  not  go  further  than  those 
matters  pertaining  to  organization,  much  aid  could  be 
rendered  individual  heads  of  departments  by  placing 
at  their  disposal  all  the  accumulated  experience  which 
would  come  to  this  central  department.  For,  besides 
the  duty  of  collecting  information  from  within  its 
own  organization,  it  would  also  make  a  special  effort 
to  study  the  methods  and  policies  of  other  concerns. 
A  second  organization  duty  would  consist  in  keeping 
the  lines  of  authority  clearly  marked  out  between  the 
various  departments.  Weak  but  aggressive  men 
often  step  over  the  boundaries  of  their  provinces  and 
attempt  to  annex  new  duties  which  do  not  belong  to 
them ;  while  passive  men  not  only  permit  these  aggres- 
sions but  allow  their  own  administrative  methods  to 
become  immersed  in  a  mass  of  detail  which  cuts  them 
off  from  functioning  as  an  organic  part  of  the  organi- 
zation as  a  whole.  A  third  function  in  connection 
with  organization  is  the  constant  watching  for  de- 
partures from  prescribed  procedure.  The  subtlest 
evil  of  every  system  is  the  tendency  of  the  individual 
to  depart  from  the  scheme  of  organization  as  it  is  laid 


178     FACTORY  AND  OFFICE  ADMINISTRATION 

\ 

down.  The  individual  loses  sight  of  the  relation  that 
his  activity  bears  to  the  organization*  as  a  whole  and 
slights  certain  duties  which  may  cost  him  an  outlay  of 
energy  or  at  least  impose  some  discomfort. 

A  planning  department  which  performed  its  duty 
would  keep  the  organization  in  constant  working 
trim ;  lines  of  authority  and  functional  activities  would 
be  kept  clear  between  officers  and  departments,  and 
thus  the  confusion  would  be  obviated  that  comes  from 
the  duplication  of  work  and  from  the  departmental 
friction  which  arises  where  these  lines  are  blurred. 

6.  Function  II:  Development  of  methods. — The 
office,  like  the  factory,  continually  presents  new  prob- 
lems. Methods  must  be  changed  to  suit  exacting 
conditions.  This  is  not  a  valid  excuse,  however, 
for  not  adopting  some  system  of  standardization. 
While  departments  differ  from  one  another  in  some 
respects,  there  are  always  a  number  of  functions  which 
are  common  to  many  or  all  departments.  Standard- 
ization is  the  reduction  of  these  activities  to  a  common 
method  of  performance,  and  much  is  gained  in  the 
way  of  efficiency  thru  such  a  method. 

To  provide  for  improvement  in  methods  as  well  as 
to  be  prepared  for  changes,  the  office  procedure  should 
be  written  up  in  the  same  way  as  the  routine  in  the 
shop  and  factory.  The  argument  for  this  procedure 
is  the  same  as  that  given  for  the  establishing  of  rec- 
ords in  factory  administration.  Thus,  the  planning 
department  by  being  continually  on  the  alert  can  keep 
the  records  up  to  date  by  making  changes,  giving  due 


PLANNING  THE  CLERICAL  WORK          179 

consideration  to  every  department  which  is  affected 
and  seeing  to  it  that  these  standard  instructions  are 
lived  up  to  by  every  department  and  every  person  in 
each  department. 

7.  The  office  records. — The  three  prime  records  of 
the  office,  from  the  planning  department's  point  of 
view,  are  the  office  manual,  the  special  data  book  and 
the  desk  record  of  instructions.  It  is  easy  to  recog- 
nize the  counterparts  of  these  in  the  factory. 

The  office  manual  is  the  final  authority  in  office  or- 
ganization matters.  Herein  is  described  the  charac- 
ter of  the  employment  in  each  department.  Its  chief 
contribution  from  the  operative-efficiency  point  of 
view  lies  in  the  time  it  saves  by  placing  in  the  em- 
ployes' hands  an  authoritative  source  of  information; 
it  obviates  the  necessity  for  the  executive  to  take  up 
time  and  energy  in  explaining  things  which  have  al- 
ready been  decided  upon.  On  the  other  hand,  it  fur- 
nishes the  executive  detailed  data  with  reference  to 
his  organization;  this  information  is  valuable  to  him 
as  an  administrative  aid  in  the  adjustment  of  salaries 
and  promotions  pertaining  to  the  class  of  work  each 
employe  performs. 

In  order  that  the  records  may  be  kept  up  to  date, 
the  data  in  the  office  manual  must  be  supplemented  by 
>rds  which  show  the  decisions  covering  general 
>utine  from  day  to  day;  these  records  in  some  way 
lodify  the  procedure  laid  down  in  the  standardized 
istructions  of  the  manual.  This  book  of  memoranda 

known  as  the  special  data  book,  and  since  every  de- 


180     FACTORY  AND  OFFICE  ADMINISTRATION 

partment  must  keep  one  as  a  record  of  the  particular 
legislation  issued  by  the  executive  authority,  much 
confusion  can  be  avoided  by  checking  individual  de- 
partmental orders  which  would  run  at  cross  purposes 
with  those  of  other  departments. 

The  third  set  of  records  consists  of  the  individual 
instruction  cards.  As  the  work  of  specialization  goes 
on  in  both  factory  and  office,  the  greater  becomes  the 
necessity  of  clearly  defining  the  duties  and  describing 
the  activities  of  the  various  production  units,  whether 
each  unit  be  a  department,  a  machine,  a  work  bench 
or  an  office  desk.  In  the  work  of  standardizing  the 
office,  the  desk  is  coming  to  be  recognized  as  the  unit 
about  which  certain  functions  cluster  rather  than  a 
place  where  certain  individuals  work.  Accordingly 
each  desk  is  equipped  with  a  set  of  instruction  cards 
describing,  under  subject  headings  and  appropriate 
subdivisions,  the  work  to  be  done.  As  used  by  the 
Retail  Credit  Company  of  Atlanta,  Georgia,  these 
cards  are  3x5  inches  in  size,  and  each  clerk  carries 
in  a  tickler  a  set  pertaining  to  his  desk.  When  work 
is  even  temporarily  rearranged,  the  tickler  is  placed 
upon  the  desk  to  which  the  new  functions  have  been 
transferred.  This  method  standardizes  the  work  of 
each  desk  and  of  each  clerk.  The  cards  are  especially 
valuable  in  aiding  new  employes  to  master  their 
duties,  and  in  f  umishing  a  record  of  absentees  and  the 
work  of  substitutes  during  vacations. 

It  is  apparent  that  specialization  of  this  kind  tends 
to  break  down  the  coordination  which  exists  when 


PLANNING  THE  CLERICAL  WORK          181 

one  man  performs  many  functions.  The  coordinat- 
ing element  here  is  the  man  himself.  When  these 
functions  are  distributed  among  several  men,  it  is 
necessary  to  supply  administrative  coordination. 
Thus,  in  preparing  and -improving  the  records  and 
instructions,  and  in  delegating  duties,  a  planning  de- 
partment supplies  the  needed  coordination,  since  these 
matters  become  the  special  care  of  a  department 
which  looks  upon  the  control  of  office  duties  as  a  serv- 
ice to  the  whole  organization. 

8.  Function  III:  Development  of  standardiza- 
tion.— The  part  that  standardization  plays  in  modern 
business  administration  is  considered  in  Chapter  XIV. 
We  limit  its  application  in  the  office  to  the  methods, 
materials  and  equipment  used.  One  of  the  chief  in- 
fluences which  made  a  careful  study  of  standardiza- 
tion in  the  office  a  necessity,  is  the  need  of  utilizing 
space  more  efficiently.  Accordingly,  filing  cabinets, 
book  and  card  records,  stationery,  etc.,  have  gradually 
grown  smaller,  with  the  attendant  necessity  of  short- 
ening phraseology,  of  the  development  of  symbols, 
and  arranging  printed  matter  to  meet  the  space  con- 
ditions. A  planning  department,  by  keeping  on  file 
samples  of  all  the  forms  used  thruout  the  organiza- 
tion, could  give  valuable  suggestions  and  could  direct 
with  intelligence  the  development  of  a  policy  which 
would  work  toward  a  general  standardization  of  forms 
and  equipment  thruout  the  office. 

With  respect  to  the  development  of  standardized 
equipment,  the  planning  department  can  play  a  very 


188     FACTORY  AND  OFFICE  ADMINISTRATION 

important  part.  In  the  factory,  the  planning  depart- 
ment contains  a  testing  division  whose  duty  it  is  to 
examine  machines,  product  and  materials  in  accord- 
ance with  standard  specifications  of  quality,  etc.  The 
office  today,  thru  its  use  of  mechanical  aids,  is  un- 
dergoing a  like  development.  The  purchasing  de- 
partment may  provide  men  who  are  experts  in  buy- 
ing according  to  specifications  of  quality,  etc.;  their 
work  needs  to  be  supplemented,  however,  by  the  judg- 
ment of  experts  upon  the  utilization  of  the  machines 
and  materials.  The  planning  department  of  the 
office  should,  therefore,  act  as  judge  in  such  matters. 
Take  the  choice  of  a  desk  as  one  example.  The  plan- 
ning department,  by  its  study  of  the  uses  to  which  the 
desk  is  to  be  put,  can  decide  between  the  flat-top,  the 
standing  desk  and  the  "tub"  type,  with  better  results 
than  a  purchasing  department,  which  judges  pur- 
chases on  the  basis  of  prices.  Desk  standardization 
brings  many  economies,  such  as  savings  in  the  station- 
ery and  desk  supplies;  and  if  we  consider  its  impor- 
tance in  the  dispatching  of  work,  as,  for  instance,  in 
the  case  of  the  National  Cloak  and  Suit  Company 
offices,  a  very  wide  range  of  activities  is  opened  up  for 
the  consideration  of  the  planning  department. 

If  we  carry  this  function  of  the  department  a  step 
further,  we  find  that  it  also  naturally  embraces  the 
study  of  the  equipment  market  in  order  to  keep  the 
home  office  informed  as  to  all  new  and  meritorious 
labor-saving  devices.  Its  representatives  should 
know  what  is  offered  thru  the  latest  circulars  and 


PLANNING  THE  CLERICAL  WORK          183 

catalogs,  and  should  keep  in  touch  with  "business 
shows,"  expositions  and  the  experiences  of  their  com- 
petitors. 

9.  Function  IV :  Development  of  betterment 
plans. — Just  as  the  function  of  discipline  in  the  shop 
is  taken  away  from  the  shop  boss  and  placed  under 
the  planning  department  head,  so  in  the  matter  of 
handling  office  employes,  the  selection,  training  and 
guiding  is  intrusted  to  the  office  planning  department. 
Many  concerns  which  never  before  thought  of  a  plan- 
ning department  have  already  developed  good  sys- 
tems for  handling  their  employes.  Generally  these 
functions  are  connected  with  an  employment  bureau, 
where  adequate  records  of  present  and  prospective 
employes  are  kept,  and  all  the  office  positions  are 
listed  and  analyzed  as  to  qualifications  necessary  for 
their  incumbent.  There  are,  however,  many  reasons 
why  these  functions  should  be  consolidated  with  those 
of  the  planning  department.  They  are  all  activities 
which  affect  the  organization  as  a  whole,  and  by  bring- 
ing them  within  the  compass  of  one  department,  the 
same  advantages  will  result  as  in  the  case  of  the  fac-, 
tory  where  the  draftsmen  are  in  close  proximity  to 
the  store  clerk  in  the  planning  department.  They 
both  have  a  common  interest  in  the  "bill-of -materials 
schedule.'*  The  development  of  efficiency  records  in 
the  office  goes  hand  in  hand  with  salary  standardiza- 
tion, while  the  grading  of  work  is  closely  associated 
with  promotion  plans.  If  the  keeping  of  records  of 
service  and  other  qualifications  are  to  be  functions  of 


184     FACTORY  AND  OFFICE  ADMINISTRATION 

the  planning  department,  the  question  of  superan- 
nuation, and  pension  and  wage  systems  should  like- 
wise be  in  close  association  with  those  activities  which 
must  be  factors  of  more  or  less  importance  in  the  de- 
termination of  general  welfare  policies. 

10.  Organization  of  the  planning  department. — In 
large  commercial  organizations  where  the  greater 
part  of  the  work  falls  upon  the  office,  the  function  of 
planning  is  gradually  becoming  specialized.  But  the 
small  office  organization  must  meet  many  of  the 
same  problems  that  the  larger  one  does.  If  its  re- 
sources will  not  allow  of  a  special  department,  with 
its  necessary  complement  of  executives  and  clerks, 
the  study  of  the  methods  used  by  a  large  planning  de- 
partment will  prove  of  inestimable  value  in  enabling 
the  office  manager  to  classify  his  office  activities  and 
in  at  least  permitting  him  to  schedule  his  own  efforts 
with  a  clearer  vision  and  with  better  results.  Here 
he  shall  find  that  the  main  work  of  an  office  con- 
sists of  the  following  elements:  organization  routine 
and  equipment  layout,  work  processes  to  be  studied, 
standards  created  and  checked  by  continual  improve- 
ment, daily  operations  in  dispatching  orders  thru  the 
office,  and  the  cultivation  of  cooperation  and  loyalty 
among  the  workers  by  carefully  selecting  and  caring 
for  them,  and  by  planning  for  their  scientific  training 
and  guidance. 

In  the  case  of  larger  offices,  where  there  are  one 
hundred  or  more  employes,  the  planning  department 
can  be  used  to  especially  good  advantage. 


PLANNING  THE  CLERICAL  WORK          185 

11.  Personnel  of  the  planning  department. — The 
permanent  membership  of  the  planning  department 
will  correspond  in  a  general  way  with  that  of  the  pro- 
duction department  in  the  factory.  No  general  rule 
as  to  members  and  the  division  of  their  work  can  be 
laid  down,  but  we  give  below  the  judgment  of  Mr.  H. 
A.  Hopf,  of  the  Phosnix  Mutual  Life  Insurance  Com- 
pany of  Hartford,  Connecticut.  His  methods  as  ap- 
plied to  office  organization  have  proved  themselves 
very  efficient. 

The  permanent  staff  of  the  planning  department  should 
consist  of  a  manager  and  a  male  clerical  employe.  Steno- 
graphic and  typewriting  service  should  be  supplied  by  the 
stenographic  department,  but  it  might  be  deemed  advisable  to 
assign  a  special  stenographer  to  the  planning  department,  by 
reason  of  the  fact  that  much  work  of  a  confidential  nature 
would  have  to  be  performed,  and  it  might,  therefore,  be  best 
to  locate  the  stenographer  in  the  planning  department  itself. 

Upon  the  manager  of  the  planning  department  a  consider- 
able share  of  the  responsibility  for  the  success  of  the  work 
would  naturally  rest.  It  is  a  matter  of  course,  therefore,  that 
he  should  be  carefully  chosen  with  respect  to  his  qualifications 
for  the  work.  The  clerical  employe,  apart  from  the  usual 
qualifications,  would  make  himself  especially  valuable  if  he 
possessed  capabilities  as  a  draftsman.  Furthermore,  he 
should  have  an  analytical  mind  and  be  able  to  obtain  informa- 
tion from  various  departments  without  creating  friction. 

To  make  the  work  of  the  planning  department  really  effec- 
tive, it  should  reach  out  into  all  the  departments  of  the 
organization  and  endeavor  to  supplement  its  functions  by 
special  planning  in  the  individual  departments  themselves. 
This  could  best  be  done  by  the  temporary  assignment  to  the 
planning  department  of  well-qualified  and  ambitious  employes 
of  various  departments,  who  would  serve  in  the  planning 


186     FACTORY  AND  OFFICE  ADMINISTRATION 

department  in  rotation,  usually  for  a  period  of  thirty  to  sixty 
days.  This  arrangement,  if  carried  out  systematically, 
would  enable  specially  qualified  employes  from  all  over  the 
organization  to  gain  the  broad  viewpoint  so  essential  to 
proper  development,  and  would  put  them  in  a  position  more 
effectively  to  study  the  special  needs  of  their  own  depart- 
ments. 

In  this  manner,  the  better  grade  of  clerks  in  the  organiza- 
tion would  be  encouraged  to  develop  reasoning  and  observa- 
tion faculties,  and  would  gradually  form  a  special  group 
from  which  undoubtedly  many  promotions  to  various  lines  of 
work  in  the  office  could  be  made  as  vacancies  might  occur. 
Employes  would  serve  one  at  a  time  in  the  planning  depart- 
ment, preferably  during  the  slack  periods  in  their  own 
departments.  This  would  enable  the  planning  department  to 
develop  from  six  to  twelve  men  per  annum  by  means  of  special 
training,  and  the  individuals  so  chosen  could  perform  the 
regular  functions  of  the  planning  department  and  act  as 
scouts  in  securing  information  from  all  directions. 

The  period  of  service  might  be  termed  a  course  in  plan- 
ning, and  it  may  be  taken  for  granted  that  when  the  depart- 
ment representative  returned  to  his  own  department  he  would 
not  only  have  a  much  better  grasp  of  the  work  thereof  but 
also  a  far  clearer  conception  of  the  needs  and  requirements  of 
different  departments  all  over  the  organization. 

REVIEW 

If  you  examine  the  history  of  the  average  office,  what  do  you 
find  to  be  the  circumstances  attending  the  growth  and  expansion 
of  its  system  of  organization? 

Having  planned  the  work,  and  having  decided  upon  a  system 
of  routing  the  work  thru  the  office,  can  the  manager  neglect  to 
give  it  his  constant  thought  and  attention? 

What  is  your  estimate  of  a  manager  who  listens  to  sugges- 
tions that  have  proved  themselves  valuable  when  used  by  other 
concerns,  but  answers  all  arguments  by,  "Yes,  that  may  be  all 
right — but  my  business  is  different"  ? 

Is  aggressiveness  in  a  foreman  or  an  office  manager  a  sure 


PLANNING  THE  CLERICAL  WORK          187 

sign  of  strength?  How  can  a  planning  department  protect  a 
business  against  weak  aggressive  men? 

What  activities  do  you  see  in  a  large  office  that  are  common 
enough  to  all  office  work  to  be  standardized? 

What  three  types  of  records  would  you  be  able  to  keep  in  any 
office  ? 

What  influences  have  been  at  work  making  standardization 
necessary  in  office  administration? 

What  can  be  done  in  the  way  of  planning  the  welfare  work 
of  a  large  office? 

Compare  the  personnel  of  the  planning  department  of  an 
office  with  that  of  a  factory? 


CHAPTER  XIV 

STANDARDIZATION— MATERIALS  AND  EQUIPMENT 

1.  Correct  standards  the  basis  of  administrative 
judgment. — A  sound  judgment  is  the  prime  mental 
attribute  of  a  good  manager.     When  a  manager  fails 
he  is  criticized  for  not  using  good  judgment.     But  to 
accuse  a  manager  of  exercising  poor  judgment  is 
only  to  say  that  he  has  used  wrong  standards  in  draw- 
ing his  conclusions.     Judgments  are  the  results  of 
comparisons.     When  comparisons  are  made  we  con- 
sciously or  unconsciously  use  one  thing  as  a  standard 
by  which  the  other  things  are  measured.     When  the 
full  moon  rises  from  behind  the  hills  we  say  it  is  as 
large  as  a  wagon  wheel.     When  it  is  overhead  then 
we  say  it  is  as  large  as  a  plate.     In  these  cases  we 
have  unconsciously  compared  the  moon  with  certain 
objects  and  as  the  moon  moves  from  one  position  to 
another  our  judgment  varies. 

2.  Management   a   series   of    measurements. — A 
great  economist  once  said  that  all  economic  activity 
in  its  last  analysis  resolves  itself  into  the  simple  proc- 
ess of  moving  matter.     It  might  with  truth  also  be 
said  that  the  problem  of  management  resolves  itself 
into  a  series  of  measurements.     Every  manager  has 
some  standard.     The  difference  between  a  progres- 

188 


STANDARDIZATION  189 

sive  and  a  nonprogressive  manager  is  largely  deter- 
mined by  their  attitudes  toward  the  standards  which 
they  use.  The  one,  having  decided  that  a  certain  type 
of  machine  or  a  certain  kind  of  man  or  method  for 
performing  an  operation,  is  the  correct  one,  rests  con- 
tented with  using  these  units  as  standards  year  after 
year;  the  other  is  continually  on  the  lookout  for  im- 
provements in  his  machines,  men  and  methods,  and 
frequently  changes  his  standards  in  order  that  he  may 
judge  his  efficiency  under  new  conditions. 

3.  New  standards  changed  plane  of  competition. — 
When  the  Carnegie  Steel  Company  entered  the  com- 
petitive fight  which  finally  resulted  in  the  formation 
of  the  United  States  Steel  Corporation,  it  was  truly  a 
"battle  of  the  standards."  Mr.  Carnegie  proved 
himself  to  be  the  most  progressive  manager  of  the 
day,  in  view  of  his  attitude  toward  standardiza- 
tion. While  other  companies  were  judging  their 
efficiency  by  the  capacity  of  old  equipment,  Mr.  Car- 
negie was  equipping  his  plant  with  new  and  up-to- 
date  machinery.  His  standards  were  of  the  twentieth 
century,  his  competitors'  standards  were  of  the 
nineteenth.  Since  Mr.  Carnegie's  success  few  men 
have  questioned  the  necessity  of  continually  watching 
their  machine  standards  in  determining  the  efficiency 
of  their  output.  The  general  acceptance  of  this  prin- 
ciple was  a  great  step  forward.  Yet  the  problem 
connected  with  the  determination  of  machine  stand- 
ards is  a  comparatively  simple  one  when  compared 
with  the  determination  of  those  standards  which  are 

IV— 14 


190     FACTORY  AND  OFFICE  ADMINISTRATION 

connected  with  men,  and  which  become  the  basis  of 
judging  labor  efficiencies. 

To  establish  rational  work  standards  for  men  requires 
indeed  motion-studies  and  time-studies  of  all  operations,  but 
it  requires  in  addition  all  the  skill  of  a  planning  manager,  all 
the  skill  of  the  physician,  of  the  humanitarian,  of  the  psychol- 
ogist, of  the  physiologist;  it  requires  infinite  knowledge, 
directed,  guided  and  restrained  by  hope,  faith,  and  com- 
passion.1 

4.  Standards  of  labor  efficiency. — The  difficulties 
of  the  problem,  however,  should  not  deter  any  man- 
ager from  beginning  to  study  the  conditions  sur- 
rounding his  workingmen.  The  next  great  step  for- 
ward in  the  organization  of  our  industry  will  be  along 
the  lines  of  finding  and  adopting  the  true  standard 
conditions  under  which  men  shall  labor.  Perhaps 
when  the  next  great  competitive  battle  is  fought  the 
manager  who  can  measure  his  fighting  strength  in 
terms  of  labor  efficiency  will  inscribe  his  name  higher 
on  the  list  than  that  of  any  of  the  great  captains  of 
industry  of  the  past.  Such  a  man  will  have  standard- 
ized his  conditions  and  will  know  that  he  will  be  wast- 
ing less  time,  squandering  less  effort  and  spending 
less  money  than  any  of  his  competitors. 

As  before  noted,  every  manager  has  standards  of 
some  kind.  Evidences  of  these  standards  are  seen  in 
written  specifications,  in  the  purchase  of  materials, 
goods,  etc.  But  as  we  approach  the  operations  which 
the  men  perform  and  the  conditions  under  which  they 

i  Harrington  Emerson,  in  "Twelve  Principles  of  Efficiency,"  page  275. 


STANDARDIZATION  191 

work,  these  records  grow  rarer  and  rarer.  Seldom 
do  we  find  written  specifications  covering  what  might 
be  known  in  a  given  concern  as  standard  practice. 
But  when  it  is  realized  that  standard  operations  and 
standard  efficiency  are  as  valuable  to  a  firm  as  stand- 
ard materials  and  standard  machines,  then  will  be  seen 
the  true  functions  of  the  planning  department  and  its 
record  of  standard  practice. 

5.  Objections    to    standardization. — Perhaps    the 
commonest  objection  to  adopting  standards,   aside 
from  the  difficulty  of  obtaining  them  and  of  keeping  a 
permanent  record,  is  that  they  will  destroy  the  initia- 
tive and  incentive  of  the  workman.     Those  who  raise 
this  objection  seem  to  reason  that  when  a  standard  is 
once  adopted  it  is  to  remain  forever.     But  standards 
are  ever  changing,  and  that  is  the  reason  managers  are 
needed.     No  sensible  manager  of  today  will  ignore 
any  suggestions  from  his  men  which  may  improve  his 
standard  practice.     All  that  such  managers  require 
is  that  the  men  first  show  themselves  capable  of  ac- 
complishing work  according  to  the  standards  that  are 
set  by  normal  conditions.     Absolute  standards  can 
never  be  set  in  business;  therefore,  there  will  always 
be  plenty  of  opportunities  for  the  exercise  of  the 
workman's  ingenuity. 

6.  Cautions  in  adopting  business  standards. — Per- 
haps some  caution,  however,  might  be  suggested  re- 
garding the  establishment  of  standards.     In  business, 
that  particular  standard  is  desired  which  will  produce 
the  largest  output  with  the  least  effort  or  cost  under 


193     FACTORY  AND  OFFICE  ADMINISTRATION 

the  existing  conditions.  One  of  the  chief  considera- 
tions is  the  human  element.  In  a  shop  employing  one 
hundred  men,  one  man  might  be  found  who  would  be 
able  to  do  a  given  piece  of  work  three  times  as  quickly 
as  anyone  else.  If  this  man's  accomplishment  were 
taken  as  the  standard  and  the  other  men  were  forced 
to  meet  it,  the  output  in  a  very  short  time  would 
fall  appreciably.  The  men  working  beyond  their 
strength  would  soon  show  the  result  in  their  lagging 
energy.  The  excellent  man's  accomplishment  should 
not  be  the  standard  for  the  good  man's  effort,  because 
it  is  the  latter  upon  whom  the  management  must  de- 
pend in  the  long  run  for  its  steady  output.  Normal 
conditions,  and  not  "spurt"  conditions,  should  con- 
trol. The  schedule  should  be  made  so  as  to  allow  for 
the  general  run  of  men,  but  should  permit  a  place  for 
the  unusual  as  well  as  the  mediocre.  As  Mr.  Emer- 
son says,  there  are  places  where  the  poor  men  may 
fit,  even  as  the  tame  goose  plucked  for  his  feathers 
and  prepared  for  the  feast  shows  one  hundred  per 
cent  efficiency,  whereas  a  thin  wild  goose  is  far  below 
par;  but  the  efficiency  would  be  reversed,  in  the  case 
of  the  goose,  if  flight  instead  of  diet  were  being  con- 
sidered. The  schedule  must  fit  the  man  and  the  man 
must  fit  the  schedule.  There  is  no  such  thing  as  a 
universal  schedule. 

7.  Standard  materials,  first  step. — Among  the  first 
departments  into  which  definite  standards  were  intro- 
duced were  the  purchasing  and  contracting  depart- 
ments. These  standards  have  proved  their  worth  to 


STANDARDIZATION  193 

such  an  extent  that  every  business  is  familiar  with 
them.  The  extent  to  which  specifications  have  been 
standardized  is  remarkable,  and  the  results  are  sig- 
nificant of  what  might  be  done  in  other  fields. 

Too  much  emphasis  cannot  be  placed  upon  the  fact 
that  standardizing  is  a  continuous  process.  No  speci- 
fication is  necessarily  perfect,  and  modifications  and 
remodifications,  which  only  experience  will  develop, 
must  be  made  to  meet  constantly  changing  trade  con- 
ditions and  to  correct  fundamental  defects. 

8.  Standard  quantities,  second  step. — The  quan- 
tity of  each  kind  of  material  to  be  kept  on  hand  and 
the  amount  to  be  purchased  are  involved  in  the  second 
step  in  standardizing  materials.  The  object  in  view 
is  to  prevent  the  annoyance  of  running  short  (so  com- 
mon in  all  unorganized  stock  rooms) ,  to  purchase  suf- 
ficient quantities,  to  secure  good  prices  and  still  not  to 
lock  up  an  unnecessary  amount  of  capital.  This  ob- 
ject is  accomplished  by  establishing  a  minimum  below 
which  the  stock  must  never  be  allowed  to  fall.  The 
minimum  depends  upon  how  long  it  takes  to  get  sup- 
plies delivered,  how  fast  the  material  is  generally  used 
up  and  how  rapidly  it  deteriorates.  Sometimes  a  sec- 
ondary or  emergency  minimum  is  added,  if  the  new 
supplies  have  not  come  in  before  a  dangerous  point 
is  reached,  to  call  special  attention  to  that  fact.  The 
amount  to  be  purchased  depends  upon  the  saving  to 
be  gained  thru  quantity  buying,  the  room  and  help 
available  for  handling,  the  capital  tied  up,  the  sea- 
sonal variation  in  prices  and  the  amount  that  is  used. 


194     FACTORY  AND  OFFICE  ADMINISTRATION 

These  figures  are  generally  placed  directly  on  the 
material-ledger  accounts  so  that  the  stock  clerk  can 
see  instantly  when  supplies  are  running  low,  and  can 
replenish  in  time. 

9.  Monetary  savings  due  to  standard  materials. — 
One  of  the  big  advantages  of  standardizing  materials 
is  the  direct  monetary  saving.     An  examination  of  the 
supplies  used  will  generally  show  a  surprising  variety 
in  the  kinds  and  grades  of  the  same  article.     The 
Commission  on  Standardization  of  the  City  of  New 
York  found  that  the  city  had  twenty-five  different 
standards  for  horses,  and  numerous  standards  for 
coal.     They  have  been  able  to  classify  all  the  city  re- 
quirements under  seven  grades  for  horses  and  one 
specification    for   coal.     So    far,    the    Commission's 
work  has  covered  only  one-fourth  of  the  city  pur- 
chases, but  if  the  5  per  cent  saving  effected  thus  far 
can  be  applied  to  the  whole  $22,000,000  which  the  city 
spends  annually  for  supplies,  the  saving  will  be  over 
a  million  dollars  a  year. 

Since  the  introduction  of  standard  materials  is  not 
hampered  by  existing  conditions — new  materials  of 
one  kind  or  another  must  be  ordered  from  time  to 
time — it  provides  the  ideal  way  to  begin  standard- 
izing. 

10.  Standard  office  material. — Office  material  is  a 
particularly  good  field  for  standardizing,  since  differ- 
ences in  stationery  rarely  have  any  more  logical  basis 
than  chance.     For  instance,  many  kinds  of  carbon 
paper,  typewriter  ribbons,  pencils,  pens  and  erasers 


STANDARDIZATION  195 

are  found  in  every  office,  together  with  many  different 
shapes  and  sizes  of  account  books,  forms,  etc. 

11.  Example  of  standard  drawings. — The  multiple 
system  of  standard-sized  drawings  which  is  universal 
in  large  drafting  offices  can  be  used  to  advantage  in 
general  office  work.  In  this  system  the  fact  is  recog- 
nized that  all  drawings  cannot  be  made  on  one  size  of 
paper  even  tho  such  a  method  is  very  desirable.  A 
given  large  size  is  adopted  as  standard,  which  is 
divided  into  halves,  quarters  and  eighths  for  smaller 
sizes.  By  this  arrangement  all  drawings  can  be  filed 
in  cabinets  of  uniform  size  by  dividing  the  drawers  to 
correspond  with  the  smaller  drawings.  As  the  stand- 
ard-sized sheet  is  always  selected,  the  paper  can  be  cut 
to  the  best  advantage  and  without  waste.  For  in- 
stance, if  the  standard  or  A  sheet  is  23  x  36  inches, 
which  is  a  stock  size  of  paper,  the  four  sizes  allowed  in 
the  office  would  be: 

Full  sheet  A— 23  x  36. 
Half-sheet  B— 23  x  18. 
Quarter-sheet  C— 11%  x  18. 
Eighth-sheet  D— 11%  x  9. 

The  multiple  system  has  also  been  adapted  to  ship- 
ping, especially  in  seed  houses,  where  the  packages 
for  different  quantities  are  all  multiples  of  each  other. 
This  permits  all  orders  to  be  packed  in  boxes  of  the 
same  size.  Orders  too  large  for  one  box  can  be 
packed  in  several  separate  boxes  and  the  boxes  can 
be  nailed  together  with  strips  on  the  outside.  This 


196     FACTORY  AND  OFFICE  ADMINISTRATION 

saves  storage  space  in  the  shipping  room  and  greatly 
facilitates  the  routine. 

12.  Standard  equipment. — It  is  better  to  have  all 
the  machines  second  class  than  many  first  with  a  few 
second  and  third  class,  because  the  operators  on  the 
first-class  machines  will  regulate  their  speed  to  that  of 
the  workmen  on  the  second  and  third-class  machines. 
Thus  the  efficiency  of  the  first-class  machines  is  al- 
ways lowered  to  that  of  the  poorer  ones. 

All  machinery,  however  carefully  watched,  wears 
out  and  breaks  down.  To  avoid  costly  delays  it  is 
therefore  necessary  to  carry  repair  parts  in  stock.  If 
one  type  of  machine  is  used,  one  set  of  parts  will  be 
sufficient  for  all  breakages.  The  probabilities  are 
against  two  machines  breaking  down  in  the  same  way 
at  the  same  time.  If  two  kinds  of  machines  are  used, 
two  sets  of  parts  become  necessary,  because  the  parts 
of  one  will  not  interchange  with  the  parts  of  the  other. 
If  many  makes  are  used,  many  sets  of  repair  parts 
are  necessary.  Unproductive  capital  is  locked  up  in 
these  parts,  increasing  the  indirect  expense.  Machin- 
ery manufacturers  are  waking  up  to  the  importance 
of  this  matter  of  repair  parts,  so  that  it  is  now  possible 
to  get  a  complete  range  of  tools,  the  parts  of  which 
are  interchangeable;  fewer  parts  consequently  need 
to  be  carried  in  stock.  It  is  also  good  practice  to 
select  the  entire  equipment  from  one  or  two  firms, 
provided  the  purchaser  does  not  become  too  depend- 
ent upon  one  source.  Any  advantage  of  heavy  ma- 
chines of  different  makes  is  often  more  than  offset  by 


STANDARDIZATION  197 

a  gain  in  uniformity.  Where  a  firm  manufactures 
much  of  its  own  machinery  it  is  advisable  to  carry  out 
the  same  idea. 

13.  The  principle  as  applied  to  delivery  systems. — 
That  the  tendency  with  large  companies  is  toward  a 
standardization  of  their  delivery  and  office  equipment 
no  less  than  of  their  production  machinery,  is  shown 
by  the  following  advertisement: 

Another  big  order  for trucks  was  placed  yesterday — 

an  order  for  ten  from  the  Long  Island  Express  Company. 
This  concern  already  has  ten trucks,  purchased  on  Jan- 
uary 31,  1911.  The  reorder  makes  twenty  of  them,  all  told, 
$72,000  in trucks. 

Rather  significant  is  this  order.  When  a  big  company 
invests  as  much  money  as  this  in  one  manufacture  of  truck, 
its  own  answer  to  the  motor-truck  question  is  clear. 

But  consider  for  a  moment  what  other  express  companies 
have  in  the  way  of  trucks:  American  Express  Com- 
pany, 27;  Westcott  Express  Company,  11;  Adams  Express 
Company,  4. 

These  three  express  companies  have  an  investment  in 

trucks  of  $161,000.  Four  companies,  all  told,  total  $233,- 

600  in  trucks,  an  investment  that  is  greater  than  the 

capital  of  many  motor-truck  manufacturers. 

14.  Interchangeable  parts. — More  important  than 
the  number  of  designs  is  the  matter  of  standard  or  in- 
terchangeable parts,  both  of  the  same  machine  and 
of  the  machines  of  an  entire  line.     Mr.  C.  U.  Car- 
penter, in  his  "Profit-Making  Management,"  sum- 
marizes as  follows: 

The  great  advantage  of  standardized  products  is,  of 
course,  apparent.  It  means  cheapening  production  thru 


198     FACTORY  AND  OFFICE  ADMINISTRATION 

duplication  of  parts  and  ease  of  handling ;  increase  of  output 
per  square  foot  of  floor  area  thru  quicker  production,  and 
the  consequent  reduction  in  indirect  expense  per  piece;  the 
possibility  of  building  for  stock  in  slack  times  and  so  keeping 
up  the  factory  output;  quicker  deliveries  and  more  orders, 
better  satisfied  customers,  and  a  more  rapid  turning  over  of 
working  capital. 

The  differences  in  legs,  screws,  pins  and  other  un- 
important parts  of  machines  are  largely  the  result  of 
the  individual  designer's  whim,  and  should  be  obvi- 
ated. The  Engineering  Standards  Committee  of  the 
Institution  of  Civil  Engineers  discovered  in  their  in- 
vestigations that  a  large  part  of  the  differences  in 
British  rolled  sections  had  been  deliberately  intro- 
duced by  the  manufacturers,  so  that  duplicates  and 
repair  parts  would  have  to  be  ordered  from  the  origi- 
nal maker;  and  that,  instead  of  having  the  desired 
result,  this  action,  because  of  the  need  of  special  tools 
and  dies  and  the  expense  of  changing  rolls,  had  so  in- 
creased production  costs  that  the  American  and  Ger- 
man plants  were  gaining  the  trade  by  underselling. 
Where  small  parts  are  standardized,  the  need  of  con- 
tinually redesigning  them  is  eliminated  and  conse- 
quently the  designer  can  concentrate  his  skill  on  the 
essential  elements  of  the  problem. 

15.  Importance  emphasized  by  Whitmore,  1841. — 
The  importance  of  interchangeable  parts  was  first 
emphasized  by  Joseph  Whitmore  in  his  paper,  "A 
Uniform  System  of  Screw  Thread,"  read  before  the 
British  Institution  of  Civil  Engineers  in  1841.  Such 
a  system  was  first  generally  adopted  by  American 


STANDARDIZATION  199 

watch  manufacturers.  During  the  middle  of  the  last 
century  some  of  these  manufacturers  made  a  lasting 
impression  on  foreign  engineers  by  dismantling  two 
watches,  mixing  the  parts  with  similar  unused  stock 
parts  and  then  reassembling  the  watches  as  the  for- 
eigners handed  them  the  parts,  selected  at  random. 
Similar  astonishment  has  been  occasioned  in  more  re- 
cent times  by  certain  of  our  automobile  makers,  who 
performed  the  same  severe  test;  they  dismantled  a 
car  after  a  long  run,  mixed  the  parts  with  similar  stock 
parts  and  after  reassembling  them  made  another  long 
run. 

16.  Use  of  "limiting  dimensions." — To  insure  the 
fitting  together  without  any  filing  of  parts  which 
have  been  made  by  different  workmen,  the  system  of 
"limiting  dimensions"  has  been  developed.  This  sys- 
tem provides  that  important  dimensions  shall  be 
marked  in  an  appropriate  manner  as  to  the  maximum 
variation  allowable  if  the  part  is  to  match  with  its 
neighbors.  The  workman  thus  knows  where  special 
accuracy  is  required,  and  is  supplied  with  limiting 
gauges  for  testing  his  work. 

REVIEW 

Would  you  advise  your  company  to  develop  certain  standards 
and,  after  adoption,  to  hold  to  them  without  change? 

In  establishing  a  labor  standard  for  a  certain  job,  would  it 
be  good  practice  to  choose  the  best  workman  in  the  shop,  and 
set  up  his  accomplishments  for  the  day,  or  the  gob,  as  a  standard 
for  all  the  other  men? 

Why  is  the  office  a  good  place  in  which  to  begin  the  adoption 
of  standards? 


200     FACTORY  AND  OFFICE  ADMINISTRATION 

A  manufacturer  who  had  a  mixed  assortment  of  machines,  some 
high  grade  and  a  few  of  the  second  and  the  third  class,  found 
that  his  output  was  far  below  the  average.  What  effect  would 
be  produced  upon  the  labor  by  the  adoption  of  a  standard  sec- 
ond-class machine  thruout? 

What  is  meant  by  "limiting  dimensions,"  in  connection  with 
the  subject  of  standardization? 


CHAPTER  XV 

STANDARDIZATION— SYMBOLS  AND  ROUTINE 

1.  Use  of  symbols. — Convenience  is  promoted  by 
the  use  of  symbols.     A  good  symbol  system  must  be : 
(1)  unmistakable;  (2)  easy  to  remember;  (3)  brief. 

The  usual  terminology  of  tools  and  parts  is  very 
loose.  The  meaning  in  which  words  are  used  differs 
widely  among  different  firms,  and  the  same  word  is 
often  used  for  several  ideas;  it  is  consequently  neces- 
sary to  determine  which  one  is  intended.  The  first 
step  in  symbolizing,  therefore,  is  to  adopt  definite 
names  in  accordance  with  both  current  commercial 
usage  and  dictionary  definitions.  As  one  of  the  chief 
purposes  of  a  symbol  is  to  correct  the  vagueness  of 
common  language,  it  is  essential  that  each  symbol  be 
applicable  to  only  one  definite  thing  or  idea. 

2.  Constructing  a  system  of  symbols. — A  symbol 
involves  two  things,  a  sign  and  a  position.     The  sign 
may  be  a  letter,  a  figure,  some  borrowed  charac- 
ter, such  as  a  Greek  letter,  or  something  manufac- 
tured to  serve  the  purpose.     Where  there  are  enough 
signs  to  indicate  all  the  classes,  position  is  unneces- 
sary.    This  is  the  case  with  the  chemical  symbols. 
N  stands  for  nitrogen,  whether  it  is  at  the  begin- 
ning, as  in  NH4C1    (ammonium  chloride) ;  in  the 
middle,  as  in  NaNO3  (sodium  nitrate) ;  or  at  the  end. 

201 


202     FACTORY  AND  OFFICE  ADMINISTRATION 

Where,  however,  there  are  not  enough  signs  to  go 
around,  position  is  added  for  significance.  The  digit 
6  means  sixty  in  the  second  place  (60) ,  and  six  hun- 
dred in  the  third  (600).  Where  letter  symbols  are 
united  to  form  groups,  it  is  preferable  to  have  com- 
binations of  capital  and  small  letters,  as  in  the  chem- 
ical symbols,  rather  than  to  have  all  capitals,  because 
by  the  former  method  spaces  are  more  easily  distin- 
guished. Each  succeeding  capital  represents  a  place. 
In  using  numbers,  it  must  be  remembered  that  the 
range  of  any  one  column  is  0  to  9,  not  1  to  10.  Where 
letters  and  numerals  are  used  together  it  is  better  to 
alternate  them.  It  is  also  advisable  to  omit  the  letters 
I  and  O  lest  they  be  mistaken  for  one  and  zero. 

3.  Symbols  an  arbitrary  measure. — Symbol  sys- 
tems are  "standards  of  measure"  and  must  not  be  con- 
tinually changed.     In  order  to  avoid  confusion  they 
must  be  definitely,  even  if  arbitrarily,  established. 
In  fact  many  of  the  speakers  before  the  American 
Society  of  Civil  Engineers  have  claimed  that  this  is 
the  great  advantage  of  a  number  system,  since  such 
a  system  makes  no  attempt  at  being  logical.     When 
it  is  once  established  there  is  little  temptation  to  alter 
it. 

4.  Advantages  of  mnemonic  system. — Mnemonic 
means  "aiding  or  designed  to  aid  the  memory."     The 
advantage  of  using  mnemonic  symbols  is  that  less 
referring  to   charts  is  necessary  and  consequently 
there  is  less  likelihood  of  mistake.     As  a  general  rule, 
letters,  especially  when  related  to  the  words  they 


SYMBOLS  AND  ROUTINE  203 

stand  for,  are  more  easily  remembered  than  numerals. 
The  two-letter  system  is  the  one  most  generally  used. 
Its  676  possible  symbols  are  ample  for  most  require- 
ments. The  letters  should  be  either:  first  and  last 
letters  as  Rm,  for  Ram ;  or  first  and  second  letters  as 
Fr  for  Frame;  or  first  letter  and  a  letter  indicating 
the  sound  as  Dy  for  Die.  Where  none  of  these  com- 
binations is  possible  the  same  end  can  be  attained  by 
making  the  letter  so  extremely  inappropriate  as  to 
be  conspicuous.  This  is  doubtless  the  idea  back  of 
the  X  for  Inkstand  in  the  Derby  Desk  system  de- 
scribed below.  The  memorizing  of  symbol  systems  is 
not  so  formidable  a  task  as  it  appears,  because  each 
man  uses  comparatively  few  of  the  total  number  and 
need  remember  only  those  he  uses. 

5.  A  working  system. — As  one  example  of  a  well- 
constructed  system,  among  many  that  might  be  given, 
take  that  used  by  the  Derby  Desk  Company.  In 
this  system  the  following  capital  letters,  the  mne- 
monic value  of  which  should  be  noted,  are  used  to  in- 
dicate types  of  products : 

H — High  roll-top  desk. 

L — Low  roll-top  desk. 

C — Special  roll-top  desk. 

S— Flat-top  desk. 

D— Double  flat-top  desk. 

K — School-teacher's  flat-top  desk. 

F — Flat-top  typewriter  desk. 

DF — Double  desk  with  one  side  arranged  for  type- 
writer. 


204     FACTORY  AND  OFFICE  ADMINISTRATION 

PF — Flat-top  desk  with  typewriter  instead  of 
right-hand  bank  of  drawers. 

R — Roll-top  typewriter  desk. 

B — Bookcase. 

RB — Revolving  bookcase. 

P— Coat  tree. 

X — Inkstand,  single. 

DX— Inkstand,  double. 

M — Letter  tray. 

MC — Map  and  chart  case. 

T— Table. 

U — Umbrella  stand. 

W— Wardrobe. 

6.  Application  of  the  system. — As  most  of  this 
company's  desks  are  made  both  with  sanitary  legs  and 
with  drawers  to  the  floor,  sanitary  designs  are  indi- 
cated by  prefixing  the  letter  O.  Styles  of  desk  or 
bookcase  under  each  type  are  indicated  by  serial  num- 
bers. The  length  in  inches  follows  the  style  number. 
Then  comes  the  type  symbol,  and  finally  the  number 
of  the  catalog  (serially  numbered)  in  which  the  desk 
is  described. 

Take,  for  instance,  the  symbol  O3360DF8.  To 
one  who  is  familiar  with  this  system  it  is  at  once  ap- 
parent that  this  refers  to  a  sanitary  desk,  style  33, 
sixty  inches  long,  a  double  desk  with  one  side  ar- 
ranged for  a  typewriter,  described  in  catalog  num- 
bered 8. 

This  is  not  at  all  a  complex  system.  It  takes  only 
a  short  time  to  become  thoroly  familiar  with  it.  It 


SYMBOLS  AND  ROUTINE  205 

tells  all  that  is  necessary  in  order  to  identify  any 
product,  and  thus  prevents  indefiniteness  and  saves  a 
great  deal  of  time. 

7.  Use  of  numbers  in  symbols. — Size  is  best  ex- 
pressed and  most  easily  remembered  as  a  numeral. 
A  series  of  arbitrary  numbers  is  suggestive  of  the 
relative  size,  not  the  actual.     It  is  better,  if  possible, 
to  use  some  characteristic  dimension.     This  is  more 
descriptive  and  allows  the  adding  of  new  sizes  in  their 
logical  order  without  disturbing  the  existing  symbols. 
Where  arbitrary  numbers  are  assigned,  a  sufficient 
number  of  blanks  should  be  left  to  cover  all  future 
additions. 

In  addition  to  preventing  misunderstandings,  sym- 
bol systems  save  a  great  amount  of  writing  on  draw- 
ings, requisitions,  stock  records  and  time-cards ;  many 
managers  consider  this  saving  in  clerical  labor  the 
greatest  advantage  of  a  symbol  system. 

8.  Symbols  for  manufacturing.— Symbol  systems 
may  be  roughly  divided  into  four  classes  covering: 

1.  Finished  product. 

2.  Parts. 

3.  Operations. 

4.  Tools  and  machines. 

The  usual  method  of  symbolizing  the  finished  prod- 
uct is  to  divide  it  into  classes ;  to  designate  each  of 
these  classes,  if  there  are  less  than  twenty-seven,  by  a 
single  suggestive  letter ;  and  to  represent  the  different 
members  of  the  class  by  consecutive  numbers.  Thus 
a  certain  line  of  presses  may  be  grouped  as  follows: 


206     FACTORY  AND  OFFICE  ADMINISTRATION 

Class  B — Bench  Presses  of  all  kinds. 

Class  C — Cutting,  Horning  and  Wing  Presses. 
Power,  Single  or  Double  action. 

Class  D — Drawing  and  Deepening  Presses. 
Power,  Single  or  Double  action. 

Class  E — Embossing  and  Coining  Presses. 
Power,  Toggle  or  other. 

Class  F — Foot  and  Hand  Presses — Lever  Pendu- 
lum Screw,  etc.,  Single  or  Double  action. 

Class  G — Gravity  Presses,  Drops,  with  Hand  Foot 
Crank  Belt  over  Roller  Lifter. 

Class  P — Punching  and  Shearing  Presses.  Power, 
Throated. 

Class  S — Stamping  and  Bending  Presses.  Power, 
Double-crank,  Composite  frame.  Throated  or 
straight,  upright  or  inclined  rectangular  or  round 
beds. 

The  individual  presses  are  Cl,  C2,  C3,  El,  E2, 
W3,  etc. 

9.  Improving  this  method. — A  better  method,  how- 
ever, wherever  possible,  is  to  make  the  symbol  de- 
scriptive, as  are  the  chemical  symbols,  by  combining 
a  number  of  their  elements.  Thus  there  will  be  fewer 
symbols  to  remember  and  anyone  can  pick  out  the 
meaning  of  the  combined  symbol,  even  if  he  has  not 
seen  it  before.  The  Derby  Desk  Company's  system 
is  of  the  descriptive  kind. 

There  are  two  systems  of  designating  parts.  The 
older  one  numbers  the  parts  of  the  finished  model 
consecutively.  If  Pi  is  the  model  symbol,  the  part 


SYMBOLS  AND  ROUTINE  207 

symbols  would  be  Pl-1,  Pl-2,  Pl-3.  The  great  dis- 
advantage of  this  system  is  that  with  an  increase  of 
interchangeable  parts  the  same  part  used  in  two  or 
more  machines  will  have  two  or  more  symbols.  This 
makes  stockkeeping  difficult  and  perpetuates  one  of 
the  very  faults  the  system  was  designed  to  eliminate, 
the  confusion  of  common  terminology.  Its  advan- 
tage is  that  the  trade,  in  ordering  repair  parts,  will  not 
confuse  parts  of  different  models. 

10.  Aims  of  newer  methods. — The  newer  method 
aiming  at  fewer  drawings,  alternation  of  existing  pat- 
terns whenever  possible,  and  the  development  of  in- 
terchangeable parts,  takes  the  part  as  the  basis  and 
builds  up  the  final  model.     This  second  system  is,  in 
its  nature,  the  direct  opposite  of  the  first.     The  parts 
are  grouped  according  to  their  similarity,  not  their  use. 
All  bolts,  for  instance,  would  be  classed  together  as 
bolts,  and  then  would  come  such  particulars  as  ma- 
terial and  size.     This  greatly  facilitates  stockkeeping, 
and  throws  on  the  designer,  where  it  belongs,  the 
responsibility  of  making  up  a  correct  bill  of  material 
for  each  manufactured  article.     In  order  to  prevent 
confusion,  the  drawing  and  the  pattern  should  be  des- 
ignated by  the  same  symbol  as  the  part,  and  this  num- 
ber should  be  stamped  on  the  part  in  some  way,  so  as 
to  facilitate  work  in  the  factory  and  make  it  possible 
for  customers  to  order  duplicate  parts  without  con- 
sulting a  catalog. 

11.  Standard  routine. — Time-study  is  one  means 
by  which  to  develop  a  standard  routine.     The  more 


208     FACTORY  AND  OFFICE  ADMINISTRATION 

common  method  in  practice  today  is  to  establish 
standards  on  the  basis  of  experience.  This  method 
approaches  the  problem  not  from  the  standpoint  of 
the  work  to  be  done  but  from  that  of  the  best  pre- 
vious performance,  and  is  more  or  less  unconsciously 
followed  in  all  businesses.  One  man  in  a  shop  will 
turn  out  more  work  than  his  neighbor.  His  method 
is  studied  and  made  the  standard  for  the  shop. 
By  and  by,  someone  else,  perhaps  a  foreman,  will 
discover  a  short-cut  and  so,  little  by  little,  the  effi- 
ciency increases.  A  thoughtful  clerk  works  out  a 
new  way  of  handling  credits,  which  the  office  adopts. 
The  sales  manager  seeks  suggestions  from  his  older 
salesmen,  which  he  tries  out  and  finally  crystallizes 
into  a  manual,  the  codified  best-way-of -selling.  The 
difference  between  the  standardized  and  the  common 
practice  is  that  each  advance  is  at  once  officially  re- 
corded where  conditions  are  standardized,  whereas,  in 
everyday  life,  advances  are  recorded  by  tradition 
alone  and  so  are  likely  to  get  lost. 

Harrington  Emerson  has  graphically  compared 
standardized  practice  to  a  ratchet  which  holds  every- 
thing gained  so  far,  without  in  any  way  retarding 
further  progress.  The  business  executive  can  stop 
a  moment  to  rest  and  reflect  without  letting  the  busi- 
ness deteriorate.  One  man  starts  where  his  prede- 
cessor left  off,  instead  of  spending  his  time  on  a  prob- 
lem which  has  already  been  solved.  It  is  the  ratchet 
system. 

12.  Steps  in  developing  standard  routine. — The 


SYMBOLS  AND  ROUTINE  209 

first  step  in  establishing  a  standard  routine  is  to  find 
out  exactly  what  the  present  procedure  is.  One  way 
to  determine  this  is  to  have  each  employe  write  out 
exactly  what  he  does,  together  with  any  suggestions 
that  he  may  wish  to  make  concerning  the  improvement 
of  any  phase  of  the  work.  The  next  step  is  to  work 
the  best  of  these  suggestions  up  into  a  manual  to  serve 
as  a  standard  until  something  better  is  evolved.  This 
is  only  preliminary,  but  it  must  be  done  whether 
standards  are  to  be  developed  by  time-study  or  by 
evolution,  the  better  method  usually  being  to  employ 
both  methods.  The  introduction  of  a  standard  routine 
is  often  delayed  unduly  while  the  standard  is  being 
perfected  on  paper,  and  thus  much  of  the  advantage 
of  the  standard  is  lost  and  its  ultimate  perfection 
delayed.  The  quickest  way  to  get  a  standard  adopted 
is  to  place  it  in  concrete  form  before  the  office,  shop  or 
sales  force.  The  worker  must  then  agree  or  dis- 
agree ;  his  test  will  prove  the  standard  right  or  wrong. 
In  either  case,  his  ideas  are  focused  for  the  use  of  the 
office. 

13.  Profiting  by  the  experience  of  others. — It  is 
also  advisable  to  profit  by  the  experience  of  others. 
Mr.  Gilbreth  gave  the  following  testimony  before  the 
Interstate  Commerce  Commission : 

We  furnish  our  men  with  eighteen  bricks  in  what  we  called 
a  pocket  for  the  want  of  a  better  name.  That  pocket  con- 
sists of  a  tray  with  four  slats,  two  this  way  and  two  that  way 
for  handles.  I  got  the  idea  for  that  from  Mr.  Taylor  and 
Mr.  Gantt  in  the  matter  of  handling  pig  iron  at  the  Bethle- 


210     FACTORY  AND  OFFICE  ADMINISTRATION 

hem  Steel  Company.  They  found  after  long  experiment  that 
92  pounds  was  the  best  unit  for  handling  pig  iron.  If  that  is 
true  of  pig  iron,  and  the  laborer  makes  no  use  of  the  material 
he  carries,  it  must  be  true  also  of  brick.  So  we  arranged  to 
have  the  pocket  that  would  best  handle  82  pounds  of  brick.1 

Care  must  be  exercised,  in  adopting  other  stand- 
ards, to  make  sure  that  conditions  are  the  same  or  to 
make  due  allowance  for  local  conditions.  Differences 
in  machinery,  hardness  of  metal,  and  such  factors,  ap- 
parently only  details,  will  entirely  change  the  amount 
of  work  which  can  reasonably  be  expected. 

14.  Function  of  technical  societies. — The  develop- 
ment of  standards  both  of  measure  and  of  routine  is 
one  of  the  principal  duties  of  the  technical  societies. 
For  example,  the  American  Street  and  Interurban 
Railway  Association  in  1906  adopted,  and  recom- 
mended for  use  by  its  members,  a  standard  code  of 
rules  for  the  government  of  conductors  and  motor- 
men.     The   American  Railway   Master  Mechanics' 
Association  recommended  a  standard  apprenticeship 
in  1898,  which  they  have  amended  from  time  to  time. 
The  American  Institute  of  Architects  in  conjunction 
with  the  Master  Builders'  Association  have  adopted 
a  uniform  building  contract.     There  is  also  a  society 
specially  organized  to  promote  uniformity  in  methods 
of  testing  cement. 

15.  Value  of  printed  records. — Routine,  however 
developed,  should  at  once  be  put  on  paper.     The 
rapid  progress  of  civilization  since  the  introduction  of 

i  Brandeis,  "Scientific  Management,"  p.  27. 


SYMBOLS  AND  ROUTINE  211 

printing,  as  compared  with  that  of  the  centuries  be- 
fore, shows  the  efficacy  of  the  printed  record.  The 
record  of  business  routine  operations  is  known  as  a 
manual,  and  it  is  surprising  to  see  how  universally  ap- 
plicable its  regulations  are.  In  the  office,  the  cor- 
respondence manual  contains  a  series  of  carefully 
worked  out  paragraphs  covering  routine  questions, 
by  the  use  of  which  the  correspondent  can  greatly  re- 
duce the  time  necessary  to  handle  his  mail.  The  man- 
ual of  the  Long  Island  Railroad  contains  773  rules 
covering  the  duties  of  different  employes,  how  to  make 
up  trains,  the  rights  of  trains,  how  to  signal,  etc. 
Similar  codes  are  in  force  on  all  the  other  railroad 
systems.  Most  department  stores  have  their  "Book 
of  Rules."  The  "Standard  Book"  of  the  Westing- 
house  drafting  room  contains  twenty-four  drafting 
dictionaries  which  specify:  lines  to  be  used;  letters 
and  figures;  methods  of  sectioning;  mechanical  fea- 
tures, such  as  size  of  sheet,  position  of  title;  element 
charts;  illustrations  of  the  elements  of  their  various 
machines;  illustrated  index  of  terms  used;  digest  of 
the  400  pages  of  circular  instructions  issued  from  time 
to  time ;  and  sample  drawings  and  abbreviations. 

16.  Advantages  of  loose-leaf  manual. — While  the 
material  in  the  manual,  and  not  its  form,  is  the  im- 
portant thing,  nevertheless  it  is  convenient,  where  the 
firm  is  large,  to  publish  the  manual  as  a  loose-leaf 
book,  small  enough  to  slip  into  the  pocket.  Changes 
can  be  made  from  time  to  time  without  republishing 
the  whole  book;  and  because  of  its  convenient  form 


212     FACTORY  AND  OFFICE  ADMINISTRATION 

it  can  be  carried  around  and  can  be  readily  referred 
to.  It  should  be  fully  indexed  to  facilitate  its  use. 
In  small  companies  it  is  convenient  to  type,  mimeo- 
graph or  blue-print  the  manual.  An  even  simpler 
form  is  a  scrapbook  in  which  are  pasted  copies  of  each 
specification  for  material  and  of  each  letter  of  instruc- 
tion which  the  office  issues.  This  kind  of  manual  is 
not  so  convenient  as  the  others,  because  the  material  is 
not  properly  classified,  and  duplicates  cannot  be  issued 
without  considerable  trouble. 

REVIEW 

Why  do  business  men  adopt  abbreviations  for  certain  words, 
etc.,  as  soon  as  their  business  becomes  large  and  complex?  De- 
scribe a  natural  system  of  symbols? 

What  principle  underlies  the  practice  of  symbolizing  the  fin- 
ished product  after  dividing  it  into  classes,  by  designating  each 
class,  if  there  are  less  than  twenty-seven,  by  a  single  suggestive 
letter,  and  by  representing  the  different  members  of  the  class  by 
consecutive  numbers? 

Show  how  time-study  may  be  related  to  the  development  of 
a  standard  routine. 

The  manager  of  a  certain  office,  upon  hiring  a  new  man,  always 
spent  considerable  time  in  explaining  the  office  routine  to  him. 
Afterward  he  noticed  that  each  employe  in  any  one  department 
had  a  different  conception  of  his  duties  and  that  frequent  talks 
were  necessary  to  keep  the  men  doing  the  work  in  the  way  he  had 
described  to  them.  How  could  this  defect  be  remedied? 


CHAPTER  XVI 

STANDARDIZATION  AND  LABOR 

1.  Goal  of  every  producer. — One  of  the  chief  dif- 
ferences between  machine-made  and  hand-made  goods 
is  that  the  latter  possess  greater  individuality.     The 
recent  revival  of  the  handicraft  trade  shows  what  a 
strong  hold  this  quality  in  a  ware  has  upon  the  con- 
sumer.    Nevertheless,  when  the  producer  of  a  hand- 
made article  finds  that  competition  is  threatening  his 
market  he  begins  the  standardization  of  his  product. 
He  may  first  adopt  a  definite  brand  for  his  article, 
by  which  method  he  hopes  to  impress  a  community 
with  the  fact  that  his  goods  possess  a  standard  of  pur- 
ity or  some  other  excellence  which  is  highly  desired  in 
the  market.     Failing  to  monopolize  the  trade  by  this 
method,  he  may  attempt  to  hold  his  market  by  a  re- 
duction in  the  cost  of  making  his  goods.     If  his  goods 
are  made  altogether  by  hand,  the  costs  will  be  lessened 
by  turning  out  a  larger  product  than  before  in  a  given 
period  of  time.     This  he  can  do  with  the  best  results 
if  he  makes  a  standard  type  and  confines  himself  to 
manufacturing  it  over  and  over  again. 

2.  Production   limited   by   hand   labor. — This    is 
standardization,  but  its  effects  cannot  be  carried  very 
far  under  a  system  of  handicraft  labor,  for  the  work- 
ing power  of  a  man  is  limited.     However,  with  the 

213 


214     FACTORY  AND  OFFICE  ADMINISTRATION 

addition  of  steam  power  and  machinery  to  the  work- 
man's shop,  the  problem  of  fatigue  is  largely  solved; 
the  question  of  being  tired  does  not  apply  to  either  the 
engine  or  the  tools.  The  more  work  the  machines 
can  be  made  to  do,  the  higher  will  be  the  productive 
capacity  of  the  shop.  Thus,  even  in  a  primitive  fac- 
tory where  tools  and  machines  are  simple,  and  the 
motive  power  chiefly  that  of  the  operator,  attempts 
will  be  made  to  use  the  equipment  as  much  as  possible 
according  to  some  sort  of  standardization.  But  be- 
fore the  producer  can  determine  the  highest  efficiency 
of  a  shop,  he  not  only  must  know  his  own  endurance 
and  skill,  but  must  determine  what  the  possibilities  of 
his  machines  are  under  the  best  conditions. 

Here  then  we  have  the  whole  problem  of  stand- 
ardization, which  has  become  more  and  more  difficult 
to  solve.  All  machine  work  may  be  divided  into  two 
parts:  (1)  the  work  of  the  machine  and  (2)  the  work 
of  the  man  who  runs  it.  But  as  the  years  have  rolled 
by,  new  inventions  and  new  conditions  have  added 
many  variables  to  an  already  complex  problem. 

3.  Three  factors  conditioning  output. — The  three 
principal  factors  conditioning  the  output  of  both  man 
and  machine  are  speed,  the  character  of  the  material 
and  the  tools.  It  is  therefore  necessary  to  determine 
what  particular  speed,  what  particular  grade  of  ma- 
terial, what  particular  quality,  what  particular  kind 
of  tools  can  all  be  united  in  producing  the  greatest 
amount  of  goods  of  a  given  quality  during  any  pro- 
duction period.  When  these  have  been  determined 


STANDARDIZATION  AND  LABOR  215 

for  each  of  the  factors,  we  have  what  is  known  as 
standard  speed,  standard  materials  and  standard 
tools.  But  while  this  problem  is  simple  to  state,  the 
actual  work  involved  in  determining  any  one  of  these 
standards  is  enormous.  It  took  Mr.  Taylor,  with  a 
body  of  experts,  a  whole  year  to  standardize  the 
shovels  in  the  Bethlehem  coal  yards.  If  the  problem 
of  standardization  is  so  difficult  of  solution  with  so 
simple  a  thing  as  a  shovel,  what  about  the  complex 
machine  which  has  at  least  a  dozen  variables  such  as 
the  angle  of  the  cutting  part,  the  angle  of  its  edge,  the 
depth  of  the  cut,  the  speed  of  the  cut,  and  so  on?  The 
combinations  which  are  possible  with  even  nine  vari- 
ables, amount  to  416,880. 

Thus  a  machine  is  actually  capable  of  being  set 
many  thousand  ways.  It  will  be  recalled  that  Mr. 
Taylor  made  over  50,000  recorded  experiments  in  the 
determination  of  standard  feed  and  speed  for  cut- 
ting metals. 

4.  New  standards  must  be  developed  continually. — 
As  the  size  of  the  industry  increases  and  the  number 
of  men  and  machines  grows,  it  becomes  necessary  to 
apply  the  principle  of  standardization  *  to  new  proc- 
esses, equipments  and  appliances.  Thus  we  find 
standard  times  for  handling  the  work,  standard  times 
for  assembling,  standard  office  forms,  and  finally  a 
standard  wage,  which  rests  upon  a  consideration  of 

i  In  the  Santa  F6  system  of  transportation,  referring  only  to  the 
various  shops,  roundhouses,  etc.,  there  are  23,000  operations  recognized 
as  standard,  with  additions  being  made  every  year. 


216     FACTORY  AND  OFFICE  ADMINISTRATION 

the  relations  of  all  those  processes  which  have  been 
standardized,  to  the  labor  which  is  necessary  to  direct 
them. 

The  standardizing  of  a  product,  a  tool,  a  process  or 
a  relation,  depends  upon  the  removal  of  as  many  as 
possible  of  the  variable  or  uncertain  factors.  '  What 
may  be  a  standard  under  one  set  of  productive  con- 
ditions may  be  entirely  set  aside  under  another,  be- 
cause some  uncertainty  connected  with  the  old  stand- 
ard has  been  removed.  The  measure,  therefore,  that 
is  used  in  a  factory  in  determining  its  productive  ef- 
ficiency, or  the  efficiency  of  any  part  of  the  productive 
process,  is  the  lowest  possible  time  in  which  each  piece 
of  work  can  be  completed.  This  is  known  as  the 
standard  time.  A  standard  time,  however,  is  simply 
the  reduction  of  a  product  to  its  lowest  terms,  the 
product  being  made  up  of  a  number  of  other  prede- 
termined standards. 

5.  Standard  time  as  determined  by  experience. — 
When  a  foreman  turns  over  a  job  to  a  workman  and 
says,  "John,  this  ought  to  take  you  one  hour,"  it  is 
very  doubtful,  in  the  majority  of  cases,  that  either  of 
them  has  the  slightest  idea  of  the  immense  amount  of 
study  and  work  which  lies  back  of  this  simple  state- 
ment. The  standard  time  for  this  job  in  the  mind  of 
the  foreman  is  one  hour.  But  why  it  should  be  one 
hour  rather  than  some  other  time  he  could  tell  only 
by  saying  that  he  had  found  this  to  be  about  right 
after  years  of  experience ;  and  he  might  even  add  that 
this  was  the  standard  time  in  all  the  shops  that  he 


STANDARDIZATION  AND  LABOR  217 

knew,  and  that  the  foreman  before  him  had  worked 
under  the  same  conditions.  This  is  the  method  by 
which  standard  times  in  both  the  shop  and  the  office 
have  been  established,  and  it  represents  the  way  in 
which  rule-of-thumb  standards  have  developed. 
Probably  years  of  time,  thousands  of  men,  and  hun- 
dreds of  thousands  of  jobs  have  contributed  to  the  ex- 
periment of  which  the  total  outcome  was  summed  up 
in  the  foreman's  direction:  "John,  this  ought  to  take 
you  one  hour." 

6.  New  conditions  make  time-standard  hard  to 
obtain. — Modern  investigations  show  that  standard 
times  which  have  been  determined  by  the  experience  of 
the  past  are  not  always  safe  guides.  The  man  who 
can  do  the  work  does  not  necessarily  know  the  best  way 
to  do  it.  Mr.  Gantt  gives  a  record  of  a  plant  where 
the  standard  times  in  the  running  of  a  loom  were  based 
upon  usual  practice.  The  manager,  however,  after  a 
short  investigation  considered  the  plant  ready  to  adopt 
scientific  management;  accordingly  he  adopted  an 
arbitrary  new  standard  time.  He  put  a  weaver  at 
work  upon  a  loom,  but  on  the  very  first  day  the 
schedule  broke  down.  The  next  two  weeks  were  spent 
by  the  management  in  studying  the  adjusting  of  the 
parts,  and  in  getting  the  bobbins  filled  properly  so  that 
the  loom  would  be  uniform  and  standardized.  Not 
until  all  this  had  been  done  could  the  management  in 
fairness  ask  the  worker  to  do  the  job  in  the  new  stand- 
ard time.  Then  he  did  it,  and  the  weaving  was  gradu- 
ally accomplished  on  the  new  basis. 


218     FACTORY  AND  OFFICE  ADMINISTRATION 

7.  Some  general  considerations  in  standard  times. — 
The  determination  of  the  time- standard  is  one  of  the 
biggest  problems  before  every  factory  and  office  of  to- 
day.   It  involves  the  whole  question  of  time-  and  mo- 
tion-studies besides  many  problems  of  human  fatigue, 
and  the  like.     Therefore,  there  will  be  no  attempt  here 
to  do  more  than  point  out  some  general  considerations 
which  should  be  observed  in  arriving  at  standard  times. 
A  study  of  them  may  serve  as  a  caution  to  those  man- 
agers who  lose  sight  of  the  very  important  element  of 
time  when  planning  a  reorganization  of  their  factory 
or  office,  and  who  expect  to  get  results  within  a  few 
months  or  a  year.     The  necessity  for  time-standards 
will  be  evident  when  the  following  conditions  with  all 
their  variable  factors  are  considered. 

8.  To  attain  standard  times  in  a  shop. — Modern 
conditions  in  the  shop  so  different  from  the  state  of 
affairs  of  only  fifteen  years  ago,  have  in  general  been 
brought  about  by  (1)  the  introduction  of  high-speed 
steel  for  cutting  tools ;  ( 2 )  the  use  of  devices  for  hand- 
ling modern  material;    (3)    the  provision  of  better 
working  conditions.     The  first  of  these  factors  has 
affected  the  rate  of  production  dependent  on  the  ma- 
chine; the  second  has  established  quick  relations  be- 
tween men  and  machines ;  while  the  third  has  increased 
the  rate  of  production  on  the  part  of  the  men.     It  will 
be  necessary  here  to  speak  of  the  effect  of  the  first  two 
factors  only. 

9.  Standardize  machines  before  getting  standard 
time. — In  regard  to  the  revolutionary  effect  upon  f ac- 


STANDARDIZATION  AND  LABOR  219 

tory  work,  the  introduction  of  high-speed  cutting 
tools  stands  next  to  the  invention  of  the  steam  engine 
itself.  Hence,  before  standard  times  can  be  estab- 
lished, the  investigator  must  consider  ( 1 )  the  charac- 
ter and  limitations  of  the  existing  machine  tools ;  ( 2 ) 
the  correct  shapes  for  the  cutting  tools ;  (3)  the  proper 
temper  of  the  steel  tools;  (4)  the  best  running  condi- 
tions as  provided  by  various  cooling  agents,  etc.,  and 
(5)  ihe  maximum  speeds.  All  these  factors  having 
been  standardized,  the  time  that  machine  work  should 
take  may  be  easily  calculated  by  reference  to  slide 
rules  prepared  for  these  data.  But  the  work  done  by 
the  workmen  is  a  more  difficult  matter  to  determine 
notwithstanding  the  magnitude  of  the  task  which  has 
just  been  mentioned. 

10.  Records  must  be  provided. — When  the  stand- 
ards suggested  by  the  above  factors  have  been  devel- 
oped, it  is  further  necessary  to  establish  an  adequate 
system  whereby  all  the  data  pertaining  to  production 
may  be  collected  and  so  arranged  that  the  manage- 
ment can  feel  assured  that  the  plant  is  operating  daily 
at  the  new  standard  of  efficiency.     Any  facts  bearing 
upon  standardization  may  be  used  as  the  basis  of  other 
experiments.     Of  course,  due  consideration  should  al- 
ways be  given  to  the  conditions  existing  at  the  time  of 
the  tests. 

11.  Foremen  and  laborers  must  be  taught. — It 
is  just  as  well  to  suggest  that  such  work  belongs  to 
the  expert  alone;  for  it  is  sometimes  forgotten  that 
standardized  physical  conditions  make  up  only  part 


220      FACTORY  AND  OFFICE  ADMINISTRATION 

of  the  requirements  to  be  met  before  the  standard  time 
can  be  established.  Intelligence  in  dealing  with  the 
new  conditions  is  necessary.  Foremen  and  working- 
men  must  be  taught  to  appreciate  the  changes  and  how 
to  secure  the  results  expected ;  and  the  gaining  of  this 
standard  of  intelligence  is  a  prerequisite  also  to  the 
introduction  of  standard  times. 

12.  Standard  times  in  handling  and  assembling. — 
The  determination  of  many  of  the  standards  pertain- 
ing to  materials,  machines,  speeds  and  the  like,  be- 
longs to  the  province  of  the  engineer.     Many  progres- 
sive managers  are  now  extending  the  principle  of 
standardization  to  other  features  connected  with  the 
making  of  goods.     The  handling  of  materials  before 
and  after  they  reach  the  machine,  and  the  assembling 
of  the  parts  into  a  completed  whole  are  now  receiving 
the  same  close  attention  that  has  been  bestowed  on 
the  machinery  processes. 

13.  Elements  in  handling  time. — The  time  required 
to  handle  the  tools,  machines  and  materials  in  any 
large  factory,  is  an  important  consideration.     In  the 
Watertown  arsenal  it  took  a  workman  329  minutes 
to  cut  a  gear.     When  the  job  was  analyzed  it  was 
found  that  152  minutes  was  the  running  time  of  the 
machine,  and  177  minutes  was  the  handling  time 
taken  by  the  man  in  assembling  finished  gears,  put- 
ting in  new  blanks  to  be  cut,  adjusting  cutters  and 
lifting  pieces  to  and  from  the  machine.     In  making 
a  study  of  this  case  for  the  purpose  of  getting  at  a 
standard  time,  it  was  found  that  the  job  could  be  done 


STANDARDIZATION  AND  LABOR  221 

in  220  minutes — 109  minutes  less  than  the  actual  time 
taken.  The  machine's  running  time  was  fixed;  this 
saving  all  came  out  of  the  177  minutes  of  handling 
time. 

Handling  time,  as  a  whole,  is  divided  into  three 
parts :  that  devoted  to  (1)  handling  tools ;  (2)  hand- 
ling the  machine;  and  (3)  handling  the  materials. 
The  handling  of  the  tools  takes  the  most  time;  it  is 
estimated  that  in  many  cases  this  consumes  75  per  cent 
of  all  the  handling  time.  The  handling  of  the  ma- 
chine takes  15  per  cent  of  the  time.  The  handling  of 
materials  takes  10  per  cent. 

14.  Sample  of  standard  time  in  handling. — "It  is 
no  uncommon  thing,"  says  Mr.  H.  K.  Hathaway,  "to 
see  men  spend  fifteen  minutes  in  trying  to  screw  a  nut 
onto  a  clamping  bolt  when  0.71  minute  would  have 
sufficed  to  perform  the  whole  operation  of  lifting, 
adjusting  and  tightening  the  clamp  to  a  machine." 
In  arriving  at  a  standard  time  for  this  operation  he 
obtained  the  following  data : 

Min. 

To  lift  the  bolt,  block  and  clamp  to  table  of  machine 0.17 

To  put  the  bolt  in  slot  of  table 0.04 

To  remove  nut  from  bolt  by  unscrewing  with  fingers 0.13 

To  clamp  over  bolt  and  on  work  ... 0.05 

To  put  block  under  clamp 0.05 

To  put  washer  on  bolt  0.07 

To  screw  nut  on  bolt  with  fingers 0.13 

To  tighten  nut  lightly  with  wrench    0.07 

To  draw  nut  down  tight  with  wrench 0.10 

Total 0.71 

If  this  simple  operation  is  analyzed,  it  will  be  seen 
that  only  one  of  the  elements  of  handling  has  been 

IV— 16 


222     FACTORY  AND  OFFICE  ADMINISTRATION 

considered,  i.  e.,  the  handling  of  the  tools.  If  we 
should  desire  to  standardize  the  handling  of  the  opera- 
tions which  accompany  those  of  the  drilling  machine 
to  which  this  clamp  was  attached,  we  would  then  have  a 
standard  time  for  that  operation  of  the  machine. 
Further,  if  it  is  desired  to  study  the  handling  con- 
nected with  the  bar  of  iron  which  was  held  on  by  the 
clamp  and  drilled  by  the  machine,  another  set  of  time- 
studies  would  give  the  standard  time  for  that  opera- 
tion. Thus  the  standard  handling  time  would  be 
divided  into  four  parts,  each  of  which  would  be  stand- 
ardized. These  parts  are  the  time  for  (1)  handling 
the  material  on  its  way  to  the  machine,  (2)  setting  up 
the  job,  (3)  machining  the  work  and  (4)  removing 
the  work. 

15.  Material-handling  time. — The  method  of  hand- 
ling material  has  been  standardized  by  having  certain 
operations,  such  as  the  piling  or  placing  of  parts,  al- 
ways done  in  the  same  manner,  and  by  having  the 
parts  put  in  the  same  places  each  time  the  operation 
is  performed.  For  example,  in  the  handling  of  light 
pieces,  where  various  operations  require  close  atten- 
tion, the  stock  may  be  carried  in  boxes  of  the  stand- 
ard size.  This  reduces  to  the  minimum  the  number 
of  sizes  needed  and  effects  a  sort  of  standardization. 

A  second  standard  may  be  obtained  by  carefully 
selecting  the  place  where  the  box  is  to  stand.  A  low, 
strong  table  can  be  used.  This  table  at  once  stand- 
ardizes the  spot  where  the  stock  shall  be  placed;  and 
the  fact  that  the  workman  becomes  accustomed  to 


STANDARDIZATION  AND  LABOR  223 

reach  for  his  stock  always  in  the  same  spot  aids  ap- 
preciably by  inducing  in  him  a  set  of  standard  actions. 
The  conditions  are  now  ready  for  a  test  for  the  purpose 
of  determining  the  least  time  necessary  to  do  the  work. 
A  series  of  stop-watch  tests  upon  an  active  workman 
will  serve  as  a  basis  for  a  standard  time  for  handling 
this  part  of  the  work.  It  is  well,  however,  to  check 
this  test  by  other  trials  performed  by  an  expert 
"tester."  The  latter  is  really  a  standardized  laborer. 
16.  Standard  assembling  time. — The  establishment 
of  a  standard  time  for  assembling  work  presents  prac- 
tical difficulties  which  are  far  more  serious  than  those 
connected  with  machine  standards.  The  variations 
in  human  judgment  and  skill  are  more  difficult  to  de- 
termine than  the  peculiarities  of  a  machine.  In  most 
factories  the  workmen  dislike  to  have  their  best  speed 
known  to  the  management,  for  then  if  they  do  not  at- 
tain it,  a  relative  decrease  of  pay  often  results.  The 
only  general  rule  that  can  be  applied  in  the  determina- 
tion of  the  standard  times  in  this  work,  is  to  separate 
the  assembling  operations  for  any  particular  job  into 
as  small  a  number  as  possible.  If  a  workman  can  be 
confined  to  three  operations,  or  fewer,  the  problem  is 
much  simplified.  But  where  the  assembler  has  as 
many  as  ten  different  operations  on  a  particular  part, 
the  solution  becomes  highly  involved.  The  character 
of  the  difficulties  in  the  way  of  the  determination  of 
this  standard  time  indicates  that  the  manager  should 
help  solve  the  problem.  "The  waste  of  time,"  says 
Mr.  C.  U.  Carpenter,  in  his  excellent  book,  "Profit 


224     FACTORY  AND  OFFICE  ADMINISTRATION 

Making  in  Shop  and  Factory  Management,"  "in  the 
ordinary  assembling  department  of  the  average  manu- 
facturing concern  is  almost  beyond  belief." 

17.  Economy  gained  by  a  standard  time. — A  test 
made  by  Mr.  Carpenter  on  assembling  work  shows 
what  can  be  done  in  effecting  economy  in  this  direction. 
Taking  advantage  of  a  strike  in  the  polishing  depart- 
ment, the  manager  adopted  a  system  of  determining 
the  new  men's  standard  times  of  assembling.  Twelve 
expert  polishers  were  assigned  to  instruct  sixty-two 
green  hands.  A  partial  analysis  of  the  work  after  a 
few  weeks  showed  that  a  reduction  of  40  per  cent  could 
easily  be  made  in  the  rate  paid,  and  still  the  men  could 
be  provided  with  a  good  wage.  In  three  weeks  it  was 
found  possible  to  put  the  entire  force  upon  piecework 
at  the  reduced  rate.  The  men  were  assured  that  no 
further  reduction  would  take  place  and  were  urged  to 
do  their  best.  The  records  showed  that  at  the  end  of 
a  period  of  ten  weeks,  the  average  earnings  exceeded 
$5.50  per  day,  whereas  under  the  old  system  they  were 
only  $3.00  per  day.  And  at  the  same  time,  the  work 
itself  increased  so  materially  that  at  the  end  of  six 
months  the  actual  records  showed  savings  in  the  pay- 
roll in  this  department  amounting  to  over  $55,000  per 
year. 

The  relation  of  standard  times  to  other  features  of 
organization  is  very  close  and  vital.  The  determina- 
tion of  the  "shortest  time"  in  which  a  job  can  be  done 
is  the  first  problem  to  be  solved  in  establishing  a  wage 


STANDARDIZATION  AND  LABOR  225 

system;  and  what  standard  times  mean  to  the  cost 
system  has  only  to  be  mentioned  to  be  realized. 

REVIEW 

Before  adopting  a  standard  output  for  a  machine,  why  is  it 
necessary  to  determine  what  particular  speed,  grade  of  material, 
and  quality  and  kind  of  tools  will  best  combine  to  produce  the 
desired  result? 

What  is  the  difference  between  hard-and-fast  standards  and 
standards  set  by  scientific  methods? 

What  is  the  difference  between  time-studies  and  motion- 
studies  ? 

What  conditions  in  a  modern  shop  or  office  make  the  subject 
of  standard  times  of  great  importance  to  the  manager? 

How  would  you  proceed  to  establish  the  standard  times  con- 
nected with  the  assembling  of  a  simple  product  like  a  chair? 


CHAPTER  XVII 

STANDARDIZATION  AND  RATE-FIXING 

1.  Chief  elements  in  efficiency.— The  principal  mat- 
ters in  connection  with  efficiency  that  have  been  treated 
so  far  are :     ( 1 )  the  centralization  of  manufacture  at 
shops  best  fitted  by  reason  of  location  or  otherwise 
for  doing  the  work;    (2)    standardization  of  parts, 
tools  and  operations;   (3)   supervision  of  materials, 
tools  and  methods,  and  the  planning  and  designing 
of  devices  and  tools  to  help  labor  and  machines  in  re- 
ducing delays.     There  still  remains  a  fourth  topic  for 
consideration — that  which  relates  to  the  reduction  of 
labor  cost  by  the  application  of  a  system  of  wage  pay- 
ments and  a  system  of  adequate  instruction. 

2.  Standard  time  not  always  shortest  time. — In  de- 
termining the  standard  time  of  any  process  involving 
the  combined  work  of  machines  and  men,  the  many 
difficulties  that  arise  are  largely  due  to  the  "human 
element."     Some  of  these  difficulties  have  been  men- 
tioned; among  them  is  the  difference  in  men's  capacity 
to  work.     Therefore,  before  a  standard  time  can  be 
adopted  for  a  particular  operation,  it  must  first  be  de- 
termined what  the  capacity  of  the  average  man  is.     If 
the  standard  time  is  based  upon  what  the  best  man 
can  do,  and  the  average  laborer  is  expected  to  reach 

226 


STANDARDIZATION  AND  RATE-FIXING     227 

that  standard,  the  failure  of  any  wage  system  based 
upon  it  is  practically  certain. 

3.  Standards  for  wage  systems. — Standards  are  of 
little  value  unless  they  can  be  used  as  measures  in 
comparisons.     A  standard  in  a  system  of  wages  must 
be  used  in  effecting  two  comparisons ;  first,  the  work- 
ing efficiency  of  each  laborer  at  different  times;  sec- 
ond, the  working  power  of  different  laborers.     By  a 
consideration  of  these  two  comparisons,  the  manager 
is  enabled  to  determine  what  the  individual  laborer  is 
capable  of  doing  from  day  to  day,  and  what  he  ought 
to  do  as  compared  with  the  other  laborers  who  do  the 
same  grade  of  work.     This  is  a  long  and  difficult  task, 
but  once  working  standards  have  been  determined  for 
a  man,  it  then  follows  that  the  management  must  pro- 
vide records  by  which  costs  and  profits  can  be  checked, 
and  a  proper  incentive  can  be  furnished  which  shall 
serve  to  keep  the  laborer  diligently  at  work.     How 
then  may  laborers  be  held  to  standard  performances? 

The  machine  requires  as  its  return  only  the  repairs 
and  renewals  necessary  to  keep  it  going.  The  laborer, 
on  the  other  hand,  asks  as  his  return  all  that  he  pro- 
duces. The  nearer  he  thinks  he  is  approaching  this 
reward,  the  greater  is  the  incentive  to  work.  It  is, 
therefore,  not  always  a  high  wage  that  determines  the 
labor  efficiency  of  a  factory  but  the  system  by  which 
the  wage  is  determined  and  paid. 

4.  The    moral    responsibility    in   rate-fixing. — In 
every  mechanism,  in  every  system,  in  every  relation- 
ship between  two  persons,  or  between  social  and  eco- 


228     FACTORY  AND  OFFICE  ADMINISTRATION 

nomic  groups,  there  is  a  point  upon  which  the  differ- 
ent forces  or  interests  converge  with  a  maximum  ef- 
fect. The  entire  operating  success  of  the  machine, 
business,  industrial  organization  or  social  group,  de- 
pends upon  the  man  or  institution  that  stands  at  the 
focal  point,  so  balancing  the  forces  and  interests  that 
a  perfect  equilibrium  is  obtained  and  the  structure  at 
this  point  is  kept  from  yielding  to  the  special  strain. 
Such  men,  in  the  work  of  distribution,  are  the  grain 
and  cotton  graders  and  other  inspectors  of  staple  prod- 
ucts. Upon  the  judgment  of  these  men  depends  the 
determination  of  the  class  or  grade  in  which  the  neces- 
sities of  life  are  placed,  and  in  so  far  as  they  determine 
this  they  fix  the  price  which  the  producer  will  get, 
and  which  the  consumer  will  pay  for  these  products. 
In  factory  and  in  office  the  rate-fixer  holds  a  position 
similar  to  that  of  the  grain  inspector  and  grader. 
Grading  and  rate-fixing  depend  upon  the  same  funda- 
mental principles.  One  deals  with  commodities,  the 
other  with  men,  but  both  must  discover  the  dominant 
characteristics  that  give  commodities  or  men  varying 
commercial  values.  One  value  pertains  to  the  mar- 
ket, the  other  to  the  employer.  And  each,  in  its  way, 
is  of  equal  importance  to  the  laborer.  As  a  con- 
sumer, the  wage-earner  is  interested  in  the  price  that 
he  pays  for  his  food  and  clothing — poor  grading  may 
cause  the  laborer-purchaser  a  loss,  because  he  may 
pay  for  a  quality  which  is  lacking.  As  a  producer, 
the  wage-earner  is  anxious  about  the  price  he  gets  for 
his  labor.  Bad  or  slovenly  rate-fixing  may  compel 


STANDARDIZATION  AND  RATE-FIXING      229 

him  to  take  less  for  his  work  than  he  should  get,  be- 
cause his  job  has  been  graded  below  the  class  to  which 
it  belongs.  There  is  no  other  position  in  the  business 
world  where  the  moral  responsibilities  are  greater  than 
those  of  an  inspector  whose  judgment  determines  the 
grade  of  commodity,  goods  and  labor  for  any  social 
group.  Such  men  are  standard-makers,  and  upon 
their  standards  much  of  the  happiness  of  mankind  de- 
pends. 

5.  Trade-union  opposition  to  rate-fiacing. — Said  the 
old-time  doctor  who  sold  his  own  drugs,  "It  is  silly, 
perfectly  useless,  to  depend  upon  apothecary's 
weights  for  drugs,  because  it  takes  fifty  times  as  much 
chloroform  as  it  does  cyanide  of  potassium  to  kill  a 
goat."  Analyzed,  this  statement  simply  means  that  a 
druggist's  scales  need  to  be  used  even  by  a  man  who 
knows  the  difference  between  chloroform  and  cyanide 
of  potassium.  Labor-union  leaders  often  condemn 
premium  systems  by  similar  reasoning.  "It  is  harm- 
ful, absolutely  iniquitous  to  depend  upon  the  Taylor 
system  of  wage  payment  for  a  square  deal,  because  it 
takes  fifty  times  as  much  'minimum  wage'  as  it  does 
'straight  piecework'  to  kill  a  workman." 

The  point  of  view  represented  by  such  a  statement  is 
held  by  two  distinct  classes:  (1)  those  who  do  not 
understand  the  principles  of  time-  and  motion-studies 
which  underlie  all  scientific  wage  systems,  but  who 
are  honestly  endeavoring  to  get  the  most  out  of  a  very 
complex  relationship  between  employer  and  employe, 
and  (2)  those  who  do  not  understand  these  principles 


230     FACTORY  AND  OFFICE  ADMINISTRATION 

and  who,  because  they  do  not  understand  them,  fear 
that  the  principles  will  interfere  with  certain  selfish 
interests.  These  men  prefer  to  befog  the  issue  rather 
than  analyze  the  problem  and  establish  the  true  rela- 
tionship. 

6.  The  employe  as  rate-fixer. — The  premium  or 
bonus  idea  in  industry  is  not  new.     The  difference  be- 
tween the  old  and  the  new  application  of  the  idea  has 
to  do,  first,  with  the  method  of  determining  the  bonus, 
and  secondly,  with  the  person  relied  upon  to  estab- 
lish the  bonus  standard.     The  germ  of  the  bonus  sys- 
tem lies  in  the  mind  of  every  shop  and  office  employe 
who  believes  that  he  should  be  paid  a  daily  wage  just 
for  being  "on  the  job,"  and  that  if  the  employer  wants 
extra  "results"  he  must  give  an  extra  inducement. 
The  reply  of  the  Liverpool  Harbour  Board's  car- 
penter who  applied  for  a  job  at  the  Mersey  Dock 
office,  shows  how  and  by  whom  the  bonus  standards 
were  established  under  the  traditional  systems  of  man- 
agement.    When  asked  what  wages  he  expected,  he 
replied,  "Three  shillings  if  I  take  the  hammer  here" 
(up  near  the  head) ;  "four  shillings  if  I  take  it  here" 
(half  way  down  the  handle) ;  "five  shillings  if  I  take  it 
here"  (at  the  point  where  he  could  work  most  effi- 
ciently with  it). 

7.  The  employer  as  rate-fixer. — The  labor  problem 
is  sometimes  given  a  narrow  interpretation  from  the 
administrator's  point  of  view,  as  follows :     "How  can 
I,  as  manager,  occupy  all  the  time  of  my  employes 
productively,  continuously  and  profitably?"    Driving. 


STANDARDIZATION  AND  RATE-FIXING      231 

false  allurements  and  cut-piece  rates  have  all  served 
their  day  and,  like  all  false  methods,  their  after  and 
indirect  effects  are  worse  than  the  immediate  results. 
The  distrust  which  laborers  now  have  of  every  method 
proposed  by  the  management  is  one  of  these  indirect 
effects ;  and  now  that  organized  labor  has  forced  em- 
ployers to  resort  to  some  method  other  than  that  based 
on  fear  and  guesswork,  the  good  methods  backed  up 
by  the  high-principled  motives  which  are  now  preva- 
lent, must  suffer  thru  the  opposition  of  the  unions, 
because  of  bad  predecessors.  The  wage  difficulties 
which  now  beset  the  administrators  are  a  natural  out- 
growth of  the  old  system  of  management,  which  put 
nearly  all  the  productive  responsibility  upon  the  la- 
borer. The  laborer,  not  being  able  to  pass  the  work 
farther  down  the  line  to  someone  below  him,  took  ad- 
vantage of  his  position  to  "scamp"  and  "soldier." 
The  management  then  began  to  devise  means  of  forc- 
ing a  higher  labor  efficiency  and,  as  a  result,  a  number 
of  wage  systems  appeared.  The  first  of  these  was 
the  straight  piece-rate  system.  By  its  means,  the 
manager  sought  to  stop  "soldiering"  by  paying  only 
for  what  each  man  produced.  This  had  its  desired  ef- 
fect. It  brought  about  overproduction  from  the 
management's  point  of  view,  and  overwork  from  the 
standpoint  of  the  men.  To  correct  these  evils,  the 
employer  at  first  cut  the  piece-rates,  and  the  employe 
thru  his  union  set  a  minimum  wage.  In  this  contest 
the  unions  won,  but  rather  thru  force  than  thru 
the  championship  of  a  correct  principle  of  wage  de- 


232     FACTORY  AND  OFFICE  ADMINISTRATION 

termination.  Next,  the  employer  tried  to  overcome 
the  trade-union  prestige  by  accepting  the  prevailing 
daily  wage  of  the  locality,  and  adding  to  it  a  bonus  or 
premium,  provided  a  certain  standard  task  was  per- 
formed. This  brings  us  to  the  first  formal  plan,  now 
known  as  the  Halsey-Towne  premium  system.  Altho 
this  left  the  situation  very  little  better  than  before,  yet 
it  did  show  the  weakness  of  any  system  which  did  not 
try  to  determine  the  nature  of  each  task  from  direct 
observation  before  a  rate  of  payment  was  attached  to 
it.  The  fundamental  weakness  of  this  system  was  its 
reliance  upon  the  past  records  of  performance,  and 
upon  the  workingmen's  own  estimate  of  what  should 
constitute  a  reasonable  time  of  performance. 

To  remedy  this  fault,  the  third  step  in  the  develop- 
ment of  wage  systems  was  introduced.  Mr.  Taylor, 
in  his  differential  piece-rate  system,  placed  the  empha- 
sis upon  the  importance  of  making  a  close  analysis  of 
each  job  before  a  standard  of  performance  should  be 
published.  This  study  being  made  by  the  manage- 
ment and  under  the  direction  of  experts,  little  import- 
ance was  attributed  to  the  old  records  of  the  employe 
or  to  the  employe's  estimate  of  his  own  worth. 

In  this,  as  in  all  scientific  methods,  lasting  results 
and  permanent  progress  could  be  obtained  only  by 
getting  accurate  measurements.  The  early  investi- 
gators relied  upon  miscellaneous  records  and  imper- 
fect judgment;  the  later  students  of  the  question  in- 
sist upon  first,  an  isolation  of  the  unit  to  be  measured ; 
second,  standardized  conditions  in  the  method  of  meas- 


STANDARDIZATION  AND  RATE-FIXING      233 

urement ;  and  third,  devices  for  taking  measurements 
which  shall  be  free  from  the  personal  equation. 
These  tests,  having  been  applied  to  an  office  or  factory 
job,  resulted  in  the  establishment  of  two  important 
methods  of  scientific  investigation  before  a  wage  rate 
can  be  fixed,  or  a  wage  system  established.  These 
methods  are  known  as  motion-study  and  time-study; 
in  the  development  of  each,  two  names  stand  out 
prominently.  Mr.  Frank  B.  Gilbreth,  by  applying 
the  use  of  the  motion-picture  camera,  the  speed-clock 
and  the  cyclegraph  to  motion-study,  and  Mr.  S.  E. 
Thompson,  thru  his  stop-watch  tests  and  scientific 
time-studies,  have  made  motion-study  and  time-study, 
as  administrative  aids,  almost  separate  professions  in 
themselves.  Altho  these  studies  are  the  basis  of  any 
scientific  system  of  fixing  the  rate  of  pay,  it  is  not  pos- 
sible here  to  go  into  detailed  description  of  them  fur- 
ther than  to  remark  that  the  fundamental  distinction 
between  the  two  is  this:  Motion-study  is  applied  to 
the  analysis  of  each  operation,  with  the  object  of  sepa- 
rating it  into  the  most  elementary  motion  units  possi- 
ble. Here  time-study  comes  in  and  measures  these 
units.  Time-study,  then,  has  to  do,  fundamentally, 
with  the  measurement  of  units.  At  this  point,  the 
motion-study  element  comes  in  again,  since  in  estab- 
lishing a  new  method  of  performing  the  work  only  the 
efficient  units  are  combined.  Then  the  operation  may 
be  spoken  of  as  being  standardized. 

8.  Rate-fixing  as  a  science. — By  comparing  Eng- 
land and  the  United  States,  the  progress  of  manage- 


234     FACTORY  AND  OFFICE  ADMINISTRATION 

ment  can  be  measured  in  terms  of  the  position  which  is 
given  to  rate-fixing.  In  England,  the  rate-fixer's 
function  may  be  summed  up  in  the  remark  made  by  a 
prominent  works  manager:  "A  rate-fixer  should  be 
able  to  detect  at  a  glance  if  the  proper  speeds  and 
feeds  are  in  use  on  machines  he  is  constantly  dealing 
with."  And  so  far  as  the  office  is  concerned,  the  great 
majority  of  concerns  have  given  very  little  attention 
to  either  speed  or  feeds. 

In  America,  the  art  has  moved  from  a  position 
where  it  depended  upon  the  eye  and  experience  of  a 
trained  observer,  to  the  point  where  accurate  measur- 
ing instruments,  close  analysis  of  motions  and  the  se- 
lection of  the  most  efficient  are  in  use.  With  Eng- 
land, the  United  States  recognizes  the  importance  of 
the  skill  and  experience  of  the  foreman  in  following 
motions  with  his  eye,  and  in  judging  the  amount  of 
time  that  they  consume.  Sight,  hearing  and  touch 
must  all  be  keenly  developed,  but  this  training  fits  an 
expert  only  in  getting  preliminary  results,  which  can 
be  obtained  without  the  use  of  devices. 

In  American  practice  it  is  after  this  preliminary 
study  has  been  made  that  the  emphasis  is  placed.  In 
making  more  intensive  studies  of  certain  trades,  such 
as  shoveling,  concrete  work,  brick-laying  and  the  like, 
it  was  found  advantageous  to  photograph  the  various 
positions  of  the  hands,  arms  and  feet  during  the  oper- 
ation, as  well  as  to  record  the  time  that  the  operator 
took  to  move  from  one  position  to  another.  And 
when  all  this  was  done  for  one  method,  the  results 


STANDARDIZATION  AND  RATE-FIXING     235 

were  compared  with  those  of  other  methods.  Mr. 
Gilbreth  who,  in  collaboration  with  Mrs.  Gilbreth, 
has  done  much  in  the  cause  of  rate-fixing,  in  develop- 
ing devices  for  accurately  recording  motion  and  time 
measurements,  has  been  able  to  use  the  modern  pic- 
ture-camera in  combination  with  a  speed-clock  so  that 
movements  in  surgical  operations  have  been  recorded 
and  timed  to  the  millionth  part  of  an  hour.  This  fact 
is  mentioned  to  show  the  direction  which  the  science 
has  taken,  and  the  results  which  can  be  obtained  in  the 
study  of  motions.  Such  close  measurements  would 
seldom  be  necessary,  however,  in  the  study  of  motions 
pertaining  to  industrial  and  office  operations. 

9.  Rate-fixing  as  an  art. — The  recognition  of  rate- 
fixing  as  an  art  distinct  from  f oremanship,  dates  prac- 
tically from  the  use  of  high-speed  steel  and  the  ac- 
companying development  of  the  premium  system  of 
wage  payment.  Mr.  Taylor  emphasized,  as  early  as 
1885,  the  necessity  of  segregating  this  function  of 
rate-fixing,  and  the  subject  received  similar  attention 
at  about  this  time  on  the  river  Tyne.  It  was  not  un- 
til 1900,  however,  that  rate-fixing  became,  in  both 
England  and  America,  an  important  object  of  ad- 
ministrative attention. 

In  the  case  of  machine  shops — and  the  same  princi- 
ples would  hold  in  other  shops  and  in  the  office — Mr. 
Taylor  divided  the  function  of  time-study  so  that  it 
would  apply  to  (1)  preparation  allowance  and  (2) 
operating  time.  In  the  following  table,  which  has 
been  adapted  to  English  as  well  as  American  condi- 


236     FACTORY  AND  OFFICE  ADMINISTRATION 

tions,  we  find  the  details  for  an  elementary  time-study : 

A.  Preparation  allowance: 

(1)  Taking  instructions  from  job  boss    (charge 
handwork,  material,  drawings,  etc.,  at  machine  in 
advance). 

(2)  Obtaining  tools  (fixing,  cutting  and  gauging) . 

(3)  Preparing  machine  and  setting  up  tools. 

(4)  Restoring  machine  to  normal  conditions,  re- 
turning drawings,  tools,  etc.,  at  end  of  job. 

B.  Operating  time  per  piece: 

(1)  Cutting  time. 

(2)  Securing  and  setting  work  in  machine  (crane 
service  where  needed). 

(3)  Changing  tools  (allow  for  grinding  if  not  pro- 
vided for  by  tool  room) . 

(4)  Starting  out  and  sizing;  also  allow  for  return- 
ing the  tool  to  starting  point  or  any  other  place  re- 
quired (sometimes  averaged  as  25  per  cent  of  cutting 
time). 

(5)  Gauging. 

(6)  Minimum  rest  period    (sometimes  taken   at 
5  to  12  per  cent  of  net  working  time,  items  1,  2,  3,  4 
and  5 ) . 

Under  a  system  of  scientific  management  the  above 
factors  would  be  carefully  planned  and  timed.  In 
ordinary  practice,  however,  the  rate-fixer  would  look 
thru  his  records  of  the  work  done  by  the  machine  until 
he  found  a  piece  of  work  as  nearly  as  possible  similar 
to  the  proposed  job;  he  would  then  guess  at  the  time 
required  to  do  the  new  piece  of  work.  In  determin- 


STANDARDIZATION  AND  RATE-FIXING     231 

ing  the  times  in  cases  where  close  time  measurements 
have  not  been  taken,  English  and  American  practice 
would  not  vary  much.  Thus  in  the  above,  a  close  es- 
timate of  the  possible  operating  time  having  been 
made,  a  margin  of  50  per  cent  is  added  to  establish  an 
operating  time  limit.  A  similar  method  is  allowed  in 
the  case  of  the  preparation  allowance.  This  50  per 
cent  is  estimated  by  assuming  that  if  the  man  does  the 
job  within  standard  time  he  will  be  paid  at  a  rate  based 
on  one-half  the  time  saved.  He  will  thus  automati- 
cally earn  a  bonus,  or  premium,  of  25  per  cent  on  his 
time  wages,  provided,  as  is  often  the  case  in  England, 
the  Halsey-Weir  or  the  Rowan  wage  system  is  in 
operation.  If  straight  piecework  prices  are  paid,  then 
a  margin  of  only  25  per  cent  would  be  allowed  upon 
the  estimated  (standard)  time.  Of  course,  if  other 
rates  of  premium  or  bonus  should  be  desired,  then  a 
corresponding  adjustment  would  be  made  in  the  per- 
centage allowance  on  standard  times.  i 
The  safeguards  against  ill-judged  time  measure- 
ments lie,  first,  in  the  accuracy  with  which  the  condi- 
tions surrounding  the  operations  (the  job  data)  are 
standardized,  and  secondly,  in  the  thoroness  with 
which  the  job  data  are  interpreted  by  drawing,  in- 
struction card,  etc.,  and  then  put  into  records  as  guides 
for  future  practice. 

REVIEW 

After  a  standard  performance  has  been  set,  how  can  the  labor- 
ers be  held  to  their  task? 
IV— 17 


238     FACTORY  AND  OFFICE  ADMINISTRATION 

What  similarity  is  there  between  the  work  of  the  rate-fixer 
in  an  office  and  that  of  a  grader  of  cotton? 

What  opposition  would  you  expect  to  meet  from  a  trade-union 
if  you  tried  to  introduce  a  new  system  of  wage  payment  based 
on  time-studies? 

What  bad  effects  generally  follow  an  employer's  cut  in  piece- 
rates? 

Give  a  brief  resume  of  the  history  of  wage  systems,  showing 
how  the  modern  scientific  method  has  been  evolved  gradually. 

How  did  Mr.  Taylor  divide  the  function  of  time-study? 

What  safeguards  should  be  kept  in  mind  in  order  to  prevent 
ill-judged  time  measurements? 


CHAPTER  XVIII 

WAGE  SYSTEMS 

1.  Systems  of  pay. — The  most  prominent  systems 
of  pay  in  the  United  States  are  the  day-work  plan, 
the  piecework  plan,  and  various  modifications  of  the 
premium  or  bonus  plans. 

The  first  method  is  usually  employed  where  special 
conditions  prevail.  Thus,  it  would  be  fatal  to  adopt  a 
system  of  wages  in  a  department  where  great  care 
and  accuracy  were  demanded  if  the  system  stimulated 
the  workmen  to  produce  more  but  inferior  work. 

The  piecework  system  provides  for  the  payment  of 
work  by  the  piece.  It  was  at  first  hailed  with  en- 
thusiasm by  the  worker,  but  so  many  abuses  which 
proved  hurtful  to  the  pieceworker,  crept  into  the 
system  that  the  latter  now  generally  regards  it  with 
suspicion.  One  of  the  abuses  is  the  practice  of  cut- 
ting rates  when  the  men  begin  to  earn  high  wages. 
The  mischief  is  very  largely  caused  by  poor  judgment 
in  the  establishment  of  the  piece-rate  in  the  first  place. 
Neither  the  standard  prices  nor  the  standard  times 
were  based  upon  scientifically  determined  data,  but 
upon, some  such  basis  as  the  "best  previous  records," 
an  "ordinary  try-out,"  or  the  foreman's  estimate.  The 
laborer  generally  saw  that  by  working  harder  he  could 
increase  his  income  by  several  per  cent,  but  this  gener- 

239 


240     FACTORY  AND  OFFICE  ADMINISTRATION 

ally  led  to  a  corresponding  cut  in  the  price.  Thus  the 
laborer  was  obliged  to  work  very  much  harder  than  a 
few  days  before,  for  a  return  in  wages  no  larger  than 
formerly. 

2.  The  premium  or  bonus  system. — With  the  day- 
work  plan  and  the  piecework  system  as  a  basis,  other 
methods  have  been  made  possible  by  the  more  accurate 
determination  of  standard  times.     The  premium,  or 
bonus  system  is  one  which  sets  a  definite  time  for  the 
accomplishing  of  a  task,  and  which  provides  for  the 
payment  of  an  extra  sum  of  money  if  the  Work  is  com- 
pleted within  this  time.     This  is  a  modification  of  the 
day-work  plan,  whereby  a  definite  task  has  been  more 
scientifically  determined  in  regard  to  the  time  neces- 
sary to  accomplish  it.     The  principle  involved  in  this 
system,  as  in  the  other,  is  to  establish  a  fixed  rate  of 
pay  per  day,  so  that  if  the  laborer  turns  out  less  work 
than  is  demanded  by  this  standard  he  will  be  insured 
at  least  a  living  wage.     On  the  other  hand,  if  he  at- 
tains the  standard  set,  or  exceeds  it,  he  will  be  paid  a 
proportionately  larger  wage. 

3.  The    Halsey    system. — The    Halsey    system, 
named  after  its  inventor,  is  an  example  of  a  wage  sys- 
tem formulated  along  these  lines. 

A  standard  time  is  set  for  accomplishing  a  task 
but  if  for  some  cause  beyond  the  control  of  the  work- 
man that  piece  of  work  cannot  be  done  in  the  time  set, 
the  laborer  gets  the  wage  previously  agreed  upon.  It 
is  also  understood  that  this  rate  of  wages  will  not  be 
cut.  Suppose  that  the  man  were  working  on  a  six- 


WAGE  SYSTEMS  241 

hour-day  basis,  he  would  be  expected  to  finish  in  six 
hours,  and  if  he  did,  would  be  paid  25  cents  an  hour, 
or  $1.50  a  day.  If  he  did  the  work  in  five  hours  he 
would  get  a  part  of  the  wages  which  he  had  saved  by 
finishing  an  hour  sooner.  If  the  proportion  agreed 
upon  were  one-half,  he  would  then  get  $1.37%  for 
the  five  hours'  work — namely,  five  hours'  work  at  25 
cents,  plus  121A  cents  for  the  hour  he  saved.  If  he 
did  the  work  in  three  hours  he  would  get  three  times 
25  cents,  plus  one-half  of  the  wages  for  the  time  saved, 
or  $1.121/1>. 

Under  this  system,  therefore,  the  laborer  never  fell 
below  the  day-rate  that  was  fixed,  and  he  always  had 
the  chance  of  earning  more  by  turning  out  more  work. 
This  was  a  compromise  between  the  day-work  and  the 
piecework  system  which  lessened  the  effects  of  each. 
The  employer  received  part  of  the  benefit  of  the  em- 
ploye's increased  output;  thus  his  temptation  to  cut 
the  laborer's  wages  was  eliminated.  On  the  other 
hand,  the  workman  would  not  be  inclined  to  limit  his 
output  because  he  wished  to  do  as  little  work  as  possi- 
ble as  under  the  day-work  plan,  or  for  fear  that  his 
wages  would  be  cut,  which  so  frequently  happens 
under  the  piecework  system. 

4.  Taylor  differential  system. — Another  system  is 
that  known  as  the  Taylor  differential  piece-rate  sys- 
tem, also  named  after  its  inventor.  This  is  based  on 
an  accurately  determined  standard  time,  a  careful 
study  having  been  made  of  the  operations  involved 
and  of  estimates  of  how  long  it  would  take  a  first-class 


242     FACTORY  AND  OFFICE  ADMINISTRATION 

man  to  accomplish  a  given  piece  of  work.  If  that 
standard  is  reached,  the  workman  receives  a  high  rate 
of  wages.  If  he  just  falls  short  of  the  standard  set,  a 
considerable  deduction  from  the  day-rate  is  made. 

For  example,  suppose  twenty  units  or  pieces  to  be 
the  largest  amount  of  work  of  a  kind  that  can  be  done 
in  a  day.  If  a  workman  finishes  20  pieces  and  all  are 
perfect,  and  he  receives  15  cents  per  piece,  his  pay 
will  be  15  X  20,  or  $3.  If,  however,  he  turns  out 
only  19  pieces,  then  he  is  allowed  a  proportionately 
lower  price,  say  12  cents  per  piece,  and  his  pay  for  the 
day  will  be  12  X  19  or  $2.28.  If  he  succeeds  in  com- 
pleting 20  pieces,  some  of  which  are  imperfect,  then  he 
is  given  a  still  lower  rate  of  pay,  say  10  cents,  or  even 
5  cents  per  piece,  according  to  the  circumstances. 
Thus,  while  incompetence  is  heavily  penalized,  care- 
lessness is  still  more  severely  dealt  with.  This  is  only 
another  of  the  special  plans  made  to  suit  particular 
conditions.  It  could  be  introduced  into  only  high* 
grade  shops,  where  the  work  is  standardized  and  the 
men  are  trained  by  functional  foremen.  It  might  be 
applied  where  the  intensity  or  the  rate  of  production 
must  be  high  in  order  to  get  the  utmost  out  of  the*  very 
costly  machinery,  tools  and  so  on. 

5.  Efficiency  system. — The  efficiency  system  is  still 
another  of  these  methods  of  wage  payment.  Here 
the  time  limit  is  set,  as  in  the  Taylor  system,  and  if  the 
workman  fulfils  the  requirements  he  receives  a  large 
bonus ;  that  is,  the  employe  is  paid  by  day  wages,  but  is 
stimulated  by  an  additional  bonus  proportioned  to 


WAGE  SYSTEMS  243 

his  efficiency — efficiency  in  this  sense  being  the  ratio 
between  the  time  he  takes  for  the  job  and  the  standard 
or  schedule  time  set  for  him.  The  amount  of  the 
bonus  is  determined  by  a  standard  table  which  fixes 
the  percentages  of  wages,  for  time  actually  worked, 
that  is  paid  in  addition  as  bonus  at  any  determined 
rate  of  efficiency.  As  applied  in  the  Santa  Fe  shops, 
this  system  grants  no  bonus  for  work  below  66%  per 
cent  efficiency — that  is,  below  the  rate  of  working  at 
which  the  man  takes  1%  the  standard  time  for  com- 
pleting his  job;  from  that  point  upward,  it  allows 
bonus  on  a  rising  scale,  which  reaches  20  per  cent  in 
addition  to  actual  wages  at  100  per  cent  efficiency  (or 
the  completion  of  the  job  in  the  standard  time). 
Thereafter  it  adds  1  per  cent  of  wages  for  each  addi- 
tional 1  per  cent  of  efficiency. 

6.  Comparison  of  Emerson  and  Taylor  wage 
plans. — Thus  it  is  seen  that  this  system  does  not  pun- 
ish a  man  for  not  reaching  a  standard  and  obviates  the 
failing  of  the  Taylor  system  by  enabling  the  men  to 
earn  a  fair  wage  even  if  unforeseen  difficulties  occur. 
For  instance,  if  a  man  reaches  100  per  cent  efficiency, 
he  receives  a  20  per  cent  bonus;  if  he  falls  below  or 
goes  above  this  standard,  he  receives  less  or  more, 
according  to  the  following  table : 

Percentage  of 
Efficiency  Additional  pay 

67%    0 

74%    1 

80%    3.37 

85%    6.17 

90%    9.91 


244     FACTORY  AND  OFFICE  ADMINISTRATION 

Percentage  of 
Efficiency  Additional  pay 

95%    14.53 

100%    20 

110% 30 

120%    40 

7.  Comparison  of  three  fundamental  rates, — That 
the  three  rates  of  payment  may  be  compared  the  more 
easily,  the  following  table  has  been  prepared  in  which 
each  system  has  been  reduced  to  a  time  payment  basis : 

Day's  Work  Piecework  Premium 

Hours,     Daily        Hourly     Daily        Hourly      Daily       Hourly 
work      Wages        Rate       Wages          Rate       Wages        Rate 


7 

$1.75 

.25 

$1.50 

.214 

$1.75 

.25 

6 

1.50 

.25 

1.50 

.25 

1.50 

.25 

5 

1.25 

.25 

1.50 

30 

1.375 

.275 

4 

1.00 

.25 

1.50 

.375 

1.25 

.312 

3 

.75 

.25 

1.50 

.50 

1.125 

.37 

2 

.50 

.25 

1.50 

.75 

1.00 

.50 

1 

.25 

,25 

1.50 

1.50 

.875 

.875 

In  order  to  make  a  further  comparison  of  the  va- 
rious systems,  we  will  assume  that  the  following  con- 
ditions might  occur: 

( 1 )  The  workman  reports  at  the  shop,  stays  there 
all  day,  but  is  given  no  work;  (2)  the  workman  does 
the  standard  work  in  the  standard  time;  (3)  the 
workman  does  all  the  work  in  a  very  short  time,  re- 
mains in  the  shop,  but  is  given  no  further  work. 

Then,  under  the  various  systems  we  have  mentioned, 
their  pay  would  be  respectively  as  follows: 


No.l 

No.  2 

No.  3 

Day-rate. 

Full  wages. 

Full  wages. 

Full  wages. 

Piece-rate. 
Premium. 

No  wages. 
Full  wages. 

Normal  pay. 
Full  wages. 

Full  pay. 
50%    additional 

Pay- 

Taylor. 

No  pay. 

Bonus  above 

Full  bonus  and 

normal  pay. 

full  pay. 

Efficiency. 

Full  wages. 

Bonus  above 

Full  bonus  and 

normal  pay. 

full  pay. 

WAGE  SYSTEMS  245 

8.  The  purpose  of  time  and  motion-studies  and 
bonus  systems. — There  is  no  necessary  relationship  be- 
tween time-study  and  premiums.    Either  might  exist 
without  the  other  in  any  system.     Each  has  a  dis- 
tinct purpose.    A  straight  piece-rate  system  may  be 
based  on  accurate  time  and  motion-studies,  and  may 
prove  very  satisfactory  to  both  management  and  men ; 
while  a  piece-rate  plan  involving  a  large  bonus  may 
be  equally  disappointing  to  all  concerned.    Time  and 
motion-studies  should  determine  the  amount  of  work 
that  can  be  done  in  a  day.    In  short,  they  should  es- 
tablish the  basis  of  a  fair  day's  work,  and  hence  a  fair 
day's  pay.    The  premium  element  in  the  system  may 
serve  simply  as  a  means  of  distributing  the  wage,  but 
its  real  purpose  is  to  stimulate  the  worker  to  greater 
and  better  production.    Its  most  important  result  is 
the  stimulus  that  it  gives  to  human  endeavor;  while 
affording  the  basis  of  a  just  reward  it  furnishes  a 
prize  to  be  won. 

9.  Simple  bonus  plan  without  time-study. — Where 
past  records  have  been  taken  as  a  basis  of  a  wage  rate 
in  combination  with  a  simple  bonus,  the  minimum  of 
workingmen's  resistance  has  resulted.     The  bonus 
plan  of  payment  as  combined  with  methods  that  deter- 
mine accurately  the  shortest  time  in  which  a  job  can 
be  finished,  has  much  to  recommend  it.    In  the  first 
place,  it  is  readily  understood  and  can  therefore  be 
easily  introduced  among  a  body  of  laborers.     It  is 
easily  adapted  in  some  form  to  almost  any  other  sys- 
tem of  pay  that  may  already  be  in  existence  in  the 


246     FACTORY  AND  OFFICE  ADMINISTRATION 

shop.  Some  managers  have  found  it  advisable  to  ex- 
tend the  bonus  plan  so  as  to  include  the  job  bosses  and 
the  foremen.  The  plan  in  this  case  is  to  give  bonuses 
to  the  foremen  if  all  the  men  under  them  earn  bonuses. 
This  has  the  advantage  of  stimulating  the  foremen  to 
give  immediate  and  close  attention  to  the  inefficient 
workman.  They  will  either  attempt  by  proper  and 
speedy  training  to  raise  such  a  man's  efficiency,  or 
drop  him  from  the  payroll. 

Thus  from  the  point  of  view  of  labor  the  great  pur- 
pose of  standardizing,  as  to  both  operations  and  time, 
is  to  introduce  some  system  of  wages  whereby  effi- 
ciency is  increased  and  stimulated  by  means  of  bonus 
awards. 

Perhaps  the  greatest  discovery  which  the  modern 
manager  has  made  in  his  studies  and  attempts  to  solve 
his  labor  problems  thru  better  wage  systems,  is  the  fact 
that  the  efficiency  of  the  whole  organization  is  the 
efficiency  of  the  individual  workman,  and  that  the  effi- 
ciency of  the  latter  is  secured  and  increased  by  giving 
him  a  wage  proportioned  to  his  production. 

REVIEW 

Point  out  the  distinction  between  a  premium  system  that  has 
the  daywork  plan  as  a  basis,  and  a  premium  system  that  has 
the  piecework  plan  as  a  basis. 

Which  wage  system  is  based  upon  the  most  accurate  data,  the 
Halsey  system  or  the  Taylor  system? 

If  you  were  manager  of  a  high-grade  shop  where  the  work  is 
standardized  and  the  men  well-trained,  which  system  of  wage 
payment  would  you  favor  and  why? 

Employer  and  employe  are  continually  making  demands  upon 
each  other  that  are  based  on  the  argument  of  a  fair  day's  work 
and  a  fair  day's  pay.  What  do  these  terms  mean  ? 


CHAPTER  XIX 

CONTROL  OF  LABOR— SELECTION  AND  TRAINING 

1.  Selecting  the  "right  stripe" — The  employer  of 
labor  is  inclined  to  select  men  for  their  qualities 
rather  than  for  their  experience.    If  an  applicant  has 
ability  and  willingness  to  work  he  can  be  taught  what 
to  do;  whereas  laziness,  dishonesty  or  wrong  preju- 
dices will  inhibit  the  best  results  of  experience. 

"  In  determining  an  applicant's  fitness,  every  em- 
ployer of  labor  should  have  certain  standards  to  guide 
him  in  selection.  These  standards  should  involve  an 
understanding  of  the  requirements  of  the  situation ;  a 
knowledge  of  the  aptitudes,  abilities,  interests,  ambi- 
tions, resources  and  limitations  of  the  applicant;  and 
a  careful  consideration  of  the  relationships  of  these 
two  groups  of  facts. 

2.  Methods  used  by  Chalmers  and  Taylor. — In 
view  of  the  importance  which  the  average  employer 
attaches  to  experience,  the  following  lists  are  very 
significant.    One  comes  from  an  expert  in  the  selling 
field,  Mr.  Hugh  Chalmers,  president  of  the  Chalmers 
Motor  Company;  the  other,  from  an  authority  in  pro- 
duction, Mr.  F.  W.  Taylor.     Not  more  than  one 
quality  in  each  list  refers  to  experience  or  business 
training.    All  the  others  are  inherent. 

247 


248     FACTORY  AND  OFFICE  ADMINISTRATION 

HUGH  CHALMERS 

1.  Health. 

2.  Honesty. 

3.  Ability. 

4.  Initiative. 

5.  Knowledge  of  business. 

6.  Tact. 

7.  Industry. 

8.  Open-mindedness. 

9.  Sincerity. 
10.  Enthusiasm. 

F.  W.  TAYLOR 

1.  Health. 

2.  Honesty. 

3.  Brains. 

4.  Grit. 

5.  Special    knowledge,    manual    dexterity    or 

strength. 

6.  Tact. 

7.  Energy. 

8.  Judgment. 

9.  Education. 

3.  Aid  gained  from  a  written  list. — The  employer 
may  be  greatly  helped  in  choosing  his  men  if  he  makes 
out  a  similar  list  of  the  prime  characteristics  which  his 
own  experience  has  shown  him  to  be  necessary  in  the 
men  who  are  employed  in  his  business.  With  this 
list  before  him  he  can  mentally  check  up  the  applicant 
and  feel  sure  that  he  has  not  let  some  essential  slip  by 


CONTROL  OF  LABOR  249 

unnoticed.     Mr.  Chalmers'  testimony  may  be  helpful 
along  this  line: 

When  I  was  working  as  a  salesman  myself  I  was  always 
trying  to  analyze  successful  men  to  find  out  the  reason  for 
their  success.  Later  when  I  became  sales  manager  and  had 
to  employ,  train,  and  supervise  men,  I  had  these  (ten)  requi- 
sites put  on  a  blackboard  in  my  office,  and  I  used  them  for 
measuring  men,  for  discovering  their  weak  spots,  and  I  have 
always  found  them  very  helpful. 

4.  Make  a  man  analyze  himself. — Besides  the  in- 
formation which  a  manager  of  labor  gathers  from  ob- 
servation, there  is  much  benefit  to  be  gained  if  he  can 
induce  the  applicant  to  carry  on  a  proper  self-analysis. 
Altho  the  man's  estimation  of  himself  may  be  wrong, 
nevertheless  the  manager  will  see  the  problem  from  a 
different  angle  by  means  of  this  procedure,  and  many 
a  characteristic  will  disclose  itself,  even  where  the  ap- 
plicant has  attempted  to  cover  it  up.  The  following 
questions  prepared  by  Mr.  Gustav  A.  Blumenthal 
are  suggestive  of  what  may  be  done  along  this  line : 

Where  born  ? 

Is  father  living?.  .  . His  occupation? 

Is  your  health  good? If  not,  what  is  your  trouble? 


What  exercise  do  you  take  ? .  .  .  , 

Are  you  fond  of  sports? If  so,  which?, 

What  schooling  have  you  had? , 


What  are  your  favorite  studies?. 
In  what  studies  are  you  weak  ? .  , 


250     FACTORY  AND  OFFICE  ADMINISTRATION 

What  kind  of  reading  have  you  done  ? 

Are  you  following  a  definite  line  of  reading  or  study  now? 

If  so,   what? 

Do  you  sing? Play  on  any  instrument?.  .. 

Have  you  a  hobby? If  so,  what? 

Does  your  mind  concentrate,  or  skip  from  one  thought  to 

another? 

Have  you   self-confidence? Patience? 

Are  you  inclined  to  be  lazy?.  ...   Do  you  act  impulsively?.  .  . 
Do  you  make  friends  easily?.  .  .  .   Are  you  fond  of  company? 

Are  you  sensitive? Are  you  inclined  to  think 

yourself  misunderstood? 

How  do  you  spend  your  leisure  time? 

What  are  your  pleasures  ? 

What  habits  or  vices  do  you  have  to  fight  down  in  yourself? 

Are  your  thoughts  clean?.  .  .  .      Can  you  trust  yourself?.  .  .  . 

Do  you  consider  yourself  absolutely  honest  ? 

Trustworthy? ,.'..     Conscientious? 

What  is  your  religion? 

Are  you  a  church  member? 

Are  you  self-supporting? Can  you  save  money? 

How  many  depend  upon  you  for  support? 

Indicate  the  different  occupations  you  have  followed: 

Occupation :  How  long  in  it?     How  did  you  like  it? 


What  life  do  you  think  you  would  prefer  ? 

What  training  or  special  fitness  have  you  had  for  this  work? 


What  is  your  present  occupation? 

Do  you  like  it? Why? 

Do  you  aspire  to  be  an  employer  of  men  ? 


CONTROL  OF  LABOR  251 

What  is  your  greatest  ambition? 

Are  you  willing  to  pay  the  price  in  hard  work  to  attain  suc- 
cess?     

When  the  applicant  has  filled  out  the  above  blank 
the  employer  may  classify  the  information  under  the 
following  headings:  mental  characteristics;  physi- 
cal characteristics;  moral  and  social  characteristics; 
abilities  and  talents ;  vocation  in  which  success  may  be 
reasonably  expected;  courses  of  study  and  hobby  ad- 
visable. 

5.  Use  of  written  and  oral  tests. — The  oldest 
method  of  determining  fitness  is  the  written  or  oral 
examination,  but  little  use  has  been  made  of  it  in  the 
business  world.  The  Chicago  and  Northwestern 
Railway,  however,  has  a  system  of  progressive  exami- 
nations running  thru  three  years. 

Each  fireman  when  he  is  employed  is  given  the  first 
year's  book  of  questions,  the  company's  book  of  rules 
and  a  time-card.  As  soon  as  convenient  after  the 
expiration  of  his  first  year's  service,  he  is  given  a 
written  examination  by  the  traveling  engineer  or  trav- 
eling fireman,  who  also  examines  him  orally.  If  suc- 
cessful in  passing  this  test,  he  is  given  the  second 
year's  book  of  questions,  upon  which  he  is  examined 
a  year  from  that  time  in  the  same  manner.  At  the 
end  of  his  third  year  the  fireman  is  examined  by  a  joint 
board  of  examiners  appointed  for  the  whole  system; 


252     FACTORY  AND  OFFICE  ADMINISTRATION 

this  board  sits  in  Chicago  each  spring  and  fall.  Some 
of  the  traveling  engineers  and  the  airbrake  instruc- 
tors compose  this  board,  and  their  favorable  report 
makes  the  man  eligible  to  promotion  to  the  position  of 
engineer  whenever  he  is  needed  on  his  own  division. 

The  failure  to  pass  any  one  of  these  progressive 
examinations  results  in  a  second  trial  six  months  later ; 
two  successive  failures  drop  a  man  from  the  locomo- 
tive service  at  once.  No  man  is  permitted  to  waive 
his  right  to  promotion. 

6.  Testing  for  physical  and  moral  fitness. — Little 
need  be  said  about  the  necessity  for  discovering  a 
man's  physical  and  moral  qualities.  The  methods 
employed  in  obtaining  data  for  physical  fitness  lie 
largely  in  the  province  of  the  physician,  and  many 
business  houses  employ  physicians  for  this  purpose. 
But  the  testing  for  moral  qualities  is  a  comparatively 
new  feature  in  business  management.  The  usual 
procedure  is  to  "size  up  a  man,"  but  so  many  mistakes 
are  likely  to  happen  in  using  surface  appearances  as 
the  basis  of  judgment  that  business  men  are  today 
demanding  a  more  intimate  analysis  of  their  employes' 
characters.  They  are  beginning  to  recognize  that  the 
most  desirable  qualities,  such  as  conscientiousness  and 
loyalty,  are  less  in  evidence  than  initiative  and  polish, 
and  that,  moreover,  while  good  clerks  and  mechanics 
may  possess  all  of  these  qualities,  they  may  lack  the 
knack  of  personal  salesmanship. 

Difficult  as  it  is,  the  problem  of  placing  the  right 
man  in  the  right  place  is  being  successfully  solved  for 


CONTROL  OF  LABOR  253 

continually  increasing  numbers  of  men  and  women. 

7.  Control  by  education. — Business  managements, 
like  political  governments,  are  coming  to  realize  that 
the  basis  of  control  must  in  the  end  be  education. 
The  tendency  to  adopt  this  point  of  view  is  indicated 
by  the  following  examples: 

The  New  York  Edison  Company  offers  educational 
facilities  thru  its  Educational  Bureau  and  the  Edu- 
cational Committee  of  the  Association  of  Employes. 
The  committee  prepares  technical  and  accounting 
courses,  in  which  the  attendance  is  voluntary.  The 
Educational  Bureau  prepares  the  commercial  courses 
and  part  of  the  routine  work  of  the  commercial  de- 
partment, and  instruction  is  given  on  the  company's 
time. 

The  commercial  courses  include  hygiene,  health 
and  recreation;  the  basic  principles  of  salesmanship; 
company  organization ;  the  elements  of  central  station 
business-getting;  and  the  fundamental  principles  of 
electricity.  The  school  staff  consists  of  a  manager, 
an  instructor  in  charge  and  a  secretary.  The  term 
begins  in  October  and  closes  in  May.  The  work 
covers  two  years. 

The  technical  courses  consist  of  laboratory  exer- 
cises, preceded  by  a  talk  in  which  the  instructor  out- 
lines the  work  briefly.  Students  are  rated  on  their 
work.  Prizes  are  given  to  those  who  attain  the  high- 
est standing.  The  course  lasts  fifteen  weeks  each 
year — five  evenings  and  one  afternoon  each  week. 
The  accounting  course  was  offered  for  the  first  time 


254     FACTORY  AND  OFFICE  ADMINISTRATION 

during  the  year  1912-13.  It  consists  of  a  series  of 
lectures  by  a  professional  teacher.  Besides  these 
courses,  the  company  has  lectures,  given  by  their  offi- 
cials or  by  prominent  speakers,  on  general  and  public 
policy,  etc.,  and  on  technical  subjects. 

The  Metropolitan  Life  Insurance  Company  gives 
a  course  in  business  English.  It  consists  of  thirty 
weekly  lessons  in  grammar,  composition  and  business 
letter  writing.  A  fee  of  $3  is  charged.  There  are 
also  classes  in  stenography  and  typewriting.  The 
company  maintains  a  circulating  library  of  general 
literature,  science,  etc.  In  July,  1912,  there  were 
6,729  books  and  pamphlets  for  the  use  of  the  em- 
ployes. The  total  membership  of  the  library  is  2,605. 
There  is  an  average  daily  circulation  of  107  books.  A 
trained  librarian  and  three  assistants  are  in  charge. 

The  National  Metal  Trades  Association  is  lending 
its  support  to  institutions  that  are  teaching  courses 
on  industrial  subjects.  For  instance,  in  Chicago  it 
cooperates  with  the  Lewis  Institute;  in  Cincinnati, 
with  the  Continuation  School  and  Cooperative  High 
School,  as  well  as  with  the  University;  and  in  Cleve- 
land, with  the  Technical  High  School  and  the  Young 
men's  Christian  Association. 

In  Hartford,  Conn.,  the  public  school  authorities 
have  started  a  continuation  school  to  which  the  mem- 
bers of  the  Metal  Trades  Association  send  their 
apprentices.  In  St.  Louis,  members  are  working 
with  the  Rankin  Trade  School,  where  the  apprentices 
are  making  gratifying  progress.  In  Indianapolis,  a 


CONTROL  OF  LABOR  255 

committee  of  the  association  equipped  with  machin- 
ery certain  buildings  of  the  Winona  Technical  Insti- 
tute, and  furnished  scholarships  of  the  value  of  $100 
each  for  prospective  students.  The  committee  so- 
licited contributions  of  equipment  and  scholarships 
from  members  of  the  Metal  Trades  Association. 

The  American  Bankers'  Association  has  a  branch 
called  the  American  Institute  of  Banking.  Its  pur- 
pose is  to  educate  bankers  in  their  special  lines,  to 
maintain  a  standard  of  education  by  official  examina- 
tions, and  to  issue  certificates  for  the  accomplishment 
of  certain  work.  It  has  12,000  members,  organized 
into  75  chapters  in  the  principal  cities  of  the  country 
and  in  Cuba  and  Hawaii.  Employes  of  country 
banks  are  enrolled  as  correspondence  students.  The 
course  of  study  covers  the  theory  and  practice  of  bank- 
ing and  allied  principles  of  law  and  economics.  The 
course  requires  at  least  100  hours  of  class  and  corre- 
spondence work  under  approved  teachers. 

Spencer  Trask  and  Company  of  New  York  City, 
one  of  the  largest  bond-investment  houses  in  New 
York,  gives  a  course  of  instruction  covering  financial 
organization.  This  firm  requires  its  employes  to 
study  corporation  finance,  foreign  exchange,  the 
money  market,  theory  of  investments,  and  to  analyze 
current  security  fluctuations,  speculation  and  the  stock 
market.  Their  men  are  also  required  to  pass  exami- 
nations on  political  economy,  money  and  credit,  and 
the  principles  of  salesmanship. 

The  National  City  Bank  of  New  York  provides 


256     FACTORY  AND  OFFICE  ADMINISTRATION 

classes  in  business  correspondence,  French,  German, 
Spanish,  penmanship,  commercial  arithmetic  and 
bookkeeping.  These  are  given  as  a  first-year  course ; 
a  more  advanced  course  is  outlined  for  a  second  year 
of  study. 

8.  Special   training   for   the   company's   work. — 
Some  firms  try  to  give  their  employes  specific  training 
for  their  own  work.     Classes  are  held  during  work 
hours  or  in  the  evenings.     They  are  supplemented  by 
lectures  on  such  vital  subjects  as  hygiene,  sanitation, 
diet,  first  aid  to  the  injured,  and  the  like.     The  Na- 
tional Cash  Register  Company  has  an  agents'  school 
for  salesmen,  one  for  advertising  men,  one  for  officers 
for  the  study  of  business  management,  and  others  for 
foremen,  janitors  and  waiters.    The  company  has  a 
kindergarten  for  the  children  of  its  employes,  and  con- 
ducts cooking,  sewing  and  millinery  classes.    It  real- 
izes that  any  training  that  benefits  the  home  makes 
better  workers.     The  Heinz  Company  has  cooking 
and  sewing  classes  for  its  seven  hundred  girls,  most  of 
whom  are  immigrants.    The  Charles  William  Stores 
in  Brooklyn  instructs  their  salesmen  and  other  em- 
ployes, and  provides  lectures  for  the  foremen.    Many 
companies  provide  libraries  and  reading  rooms,  with 
technical  literature,  popular  fiction  and  magazines. 

9.  Manuals  as  an  educational  factor. — Some  firms 
distribute  manuals  describing  the  details  of  their  work. 
One  corporation  publishes  a  two-hundred-page  book 
with  cuts  and  reports,  and  gives  one  to  each  employe, 
who  is  supposed  to  read  it  all,  with  special  attention  to 


CONTROL  OF  LABOR  257 

the  parts  pertaining  to  his  work.  Quizzes  are  held 
frequently,  and  those  who  are  deficient  in  any  subject 
are  dismissed.  The  publication  of  the  book  costs 
$2,000  but  the  company  considers  the  money  well 
invested.  Each  new  man  must  read  the  manual  so  as 
to  get  a  general  understanding  of  the  whole  system. 
The  effect  has  been  good  in  lessening  mistakes  among 
both  old  and  new  workers.  This  system  makes  it 
easier  for  the  various  departments  to  work  together 
harmoniously.  Each  person  knows  why  he  is  doing 
certain  things,  and  as  a  consequence  has  much  more 
interest  in  his  work  and  greater  enthusiasm.  He  also 
has  some  comprehension  of  the  part  his  work  plays  in 
the  whole  organization. 

10.  Special  training  schools  for  employes. — Many 
organizations  recognize  the  value  of  giving  employes 
preliminary  training  for  their  work.  Some  find  it 
worth  while  to  broaden  the  employes'  knowledge  of 
the  business  as  a  whole,  while  a  smaller  number  are 
far-sighted  enough  to  accept  responsibility  for  aiding 
their  employes  to  fit  themselves  thru  courses  of  study 
for  advancement,  altho  the  courses  that  are  given  may 
apparently  have  but  slight  bearing  upon  the  immedi- 
ate earning  power  of  the  employes. 

The  methods  by  which  this  special  training  is  given 
differ  greatly  among  corporations.  However,  if  we 
select  the  main  features  of  these  training  schools,  it  is 
found  that  such  institutions  may  be  classified  under 
three  types  as  follows : 

(a)   Company  business  school.     In  the  type  known 


258     FACTORY  AND  OFFICE  ADMINISTRATION 

as  the  company  business  school,  the  subjects  taught 
and  the  training  given  are  related  directly  to  the  work 
of  a  particular  company.  The  type  can  be  subdivided 
into  three  groups  of  schools,  according  to  the  methods 
that  are  followed. 

The  first  group  is  directly  connected  with  those  cor- 
porations that  expect  the  student-employe  to  give  all 
his  time  to  study  while  he  is  taking  the  course;  they 
do  not,  therefore,  expect  him  to  do  productive  work 
while  he  is  in  training.  Such  a  school  expects  to  get 
definite  results  with  the  least  possible  loss  of  time;  it 
is  organized  to  accommodate  two  classes  of  employes, 
i.e.,  new  employes  and  old  employes.  This  principle 
applies  as  well  to  the  second  and  third  groups  below. 

The  second  group  embraces  those  companies  which 
combine  practice-work  with  study  and  which  are  only 
partly  productive. 

The  third  group  confines  its  efforts  to  work  courses 
alone.  In  this  kind  of  school  the  students  are  doing 
productive  labor  continually. 

(b)  Company  continuation  school.  The  second 
main  class  of  schools,  the  company  continuation 
school,  altho  typically  German,  is  gradually  working 
its  way  into  our  system  of  vocational  education.  Its 
motto  is  "Learn  while  earning." 

In  contrast  with  the  rigid  methods  employed  by  the 
first  type  in  the  selection  of  students,  we  find  few  re- 
strictions here.  The  company  continuation  school  is 
marked  by  a  somewhat  broader  educational  outlook 
than  that  of  the  company  business  school.  Accord- 


CONTROL  OF  LABOR  259 

ingly,  we  find  classes  in  English,  mathematics,  history, 
civics,  geography,  spelling,  hygiene,  typewriting, 
shorthand,  sewing  and  dressmaking.  These  are  all  in 
addition  to  a  number  of  other  subjects,  directly  re- 
lated to  specific  occupations,  such  as  engineering, 
drafting,  machine  operation,  printing,  office  work, 
telephone  operation  and  salesmanship. 

Of  this  kind  there  are  two  groups,  those  schools 
conducting  evening  classes,  and  those  holding  day  ses- 
sions. The  methods  of  instruction  are  as  varied  as 
the  subjects  taught.  Many  corporations,  however, 
use  only  the  correspondence  method. 

(c)  Public  or  private  continuation  school.  The 
third  main  type,  the  public  or  private  continuation 
school,  is  cooperative  in  its  nature  and  is  similar  to  the 
first  type,  second  group,  in  that  the  instruction  in- 
volves both  study  and  practice.  The  study  is  done, 
however,  at  the  public  school  and  under  its  direction, 
instead  of  being  done  with  the  company.  This 
method  necessitates  cooperation  between  the  business 
organization  and  the  public  school,  but  its  practicabil- 
ity is  proved  by  the  increase  in  the  number  of  firms 
that  are  using  it. 

11.  Education  for  the  whole  industry. — The  stand- 
ardization of  the  methods  and  materials  of  education 
for  each  industry  is  growing  year  by  year.  The  vari- 
ous industries  are  attacking  their  work  in  different 
ways.  This  variety  of  method  may  be  illustrated  by 
reference  to  the  department  stores  and  the  gas  com- 
panies of  the  United  States. 


260     FACTORY  AND  OFFICE  ADMINISTRATION 

The  department  stores,  as  a  rule,  are  working  inde- 
pendently of  one  another  in  their  educational  en- 
deavors. Strawbridge  and  Clothier  of  Philadelphia 
has  developed  a  system  with  reference  to  its  own 
problems,  and  Stern  Brothers  of  New  York  is  solving 
its  difficulties  by  means  of  its  own  special  methods. 
Perhaps  the  appearance  of  the  Department  Store 
Education  Association  of  New  York  City  shows  that 
the  educational  work  of  this  big  industry  will  be 
studied  along  the  more  economical  lines  by  all  the 
leading  stores  that  are  cooperating  in  the  movement. 
One  of  the  most  thoro  and  systematic  department 
store  schools  is  that  conducted  by  Stern  Brothers. 
This  school,  working  in  harmony  with  the  Depart- 
ment Store  Education  Association,  divides  its  work 
into  three  branches:  (1)  store  system  and  salesman- 
ship, (2)  merchandise  (textiles  and  textile  processes), 
(3)  merchandise  (non-textiles,  leather,  rubber,  paper, 
pottery  and  glass).  Classes  are  held  on  company 
time  and  the  instruction  is  in  the  hands  of  a  director 
and  two  assistants.  Diplomas  are  given  to  those  who 
complete  a  course.  That  the  employes  appreciate  this 
work  is  clearly  shown  in  the  organization  of  an  alumni 
society  and  the  adoption  by  its  members  of  a  special 
badge.  Not  only  is  increased  selling  efficiency  ob- 
servable as  a  product  of  this  system,  but  also  a  grow- 
ing esprit  de  corps  which  before  was  lacking. 

12.  The  work  of  the  National  Commercial  Gas 
Association. — In  contrast  with  the  methods  of  the  de- 
partment stores,  there  are  those  of  the  gas  companies, 


CONTROL  OF  LABOR  261 

which  have  attacked  their  educational  problem  thru 
their  national  organization.  As  a  consequence,  the 
educational  material  for  the  commercial  men  in  the 
gas  companies  is  uniform  thruout  the  industry.  Over 
eight  thousand  men  have  already  taken  advantage  of 
the  opportunities  offered.  While  the  work  is  based 
on  the  correspondence  method,  individual  gas  compa- 
nies, such  as  the  Public  Service  Gas  Company  of  New 
Jersey,  the  United  Gas  Improvement  Company  of 
Philadelphia,  and  the  Consolidated  Gas  Company  of 
New  York,  Brooklyn  and  Baltimore,  have  special 
well-organized  classes  under  paid  instructors,  for  car- 
rying on  the  work.  Since  the  gas  companies  have 
carried  this  kind  of  work  the  furthest,  the  following 
program  is  given  below : 

Introductory  Division,  LESSONS,  Manufacture  of  Gas — 
Distribution  of  Gas — Generation  of  Electrical  Energy — 
Transmission  and  Distribution  of  Electrical  Energy. 
REFERENCE  PAPERS,  Arithmetic — Business  English — Chemis- 
try— Properties  of  Matter — Elementary  Magnetism — Ele- 
mentary Electricity — Elementary  Mechanics — Algebra — 
Geometry — Heat — Generation  of  Electrical  Energy — Light 
— Sound.  SIDE  TALKS,  General  Suggestions  and  How  to 
Study — Arithmetic — Business  English — Manufacture  of  Gas. 

Course  1,  INDUSTRIAL  FUEL  AND  POWER,  Principles  of 
Heat — Transfer  of  Heat  and  High  Temperature  Measure- 
ment— Combustion  and  Selection  of  a  Fuel — Blast-Burner 
Design — Air  Blast — Refractories  and  Insulation  Steel — 
Heat  Treatment  of  Carbon  Steels — Heat  Treatment  of  High 
Speed  Steels — Surface  Combustion — Principles  of  Power 
Engineering — The  Gas  Engine — Steam — Factors  Govern- 
ing Efficiencies  of  Appliances — Application  of  Industrial  Gas 
to  the  Treatment  of  Materials — Industrial  Illuminating 


262     FACTORY  AND  OFFICE  ADMINISTRATION 

Engineering — Competitors  of  Industrial  Gas  (The  Indus- 
trial Fuel  Information  Books  will  be  incorporated  in  these 
lessons  and  issued  from  time  to  time). 

Course  2,  ILLUMINATION,  History  of  Illumination — Units 
of  Light  and  Illumination — Graphical  Methods  of  Presenting 
Data — Photometry — Measurement  of  Light — Production  of 
Light — Requirements  of  Illumination — Residence  Lighting — 
Church  Lighting — Office  Lighting — Factory  Lighting — In- 
dustrial Lighting — Store  Lighting — Street  Lighting. 

Course  3,  SALESMANSHIP,  General  Sales  Problems — Water- 
Heating  Circulating  Types — Air-Heating  Systems  (Gas) — 
Hotel  and  Restaurant  Appliances — Water-Heating,  Auto- 
matic, Storage,  and  Instantaneous — Domestic  Science  and  Its 
Appliance  to  Selling  Gas — Hygienic  Value  of  Using  General 
Gas  Appliances — Advertising — Window  Decoration — Do- 
mestic Cooking  Appliances — All-Gas  Kitchens — Accessory 
Cooking  Appliances  —  Domestic  Lighting  —  Commercial 
Lighting — Industrial  Lighting — Public  Lighting — The  Law 
of  Contracts — Agencies — Friendly  Relations  with  Plumbers, 
Dealers,  etc. — Architecture  and  Engineering. 

Course  4>  COMMERCIAL  MANAGEMENT,  Analysis  of  Terri- 
tory— Plan  of  Work — Office  Organization  and  Practice — 
Filing  Systems — Sales  Organization — Company  Policy — 
Choosing,  Training  and  Holding  Men — Methods  of  Compen- 
sation— Purchasing — How  to  Advertise — Selling  Aids,  Ad- 
vertising Talks — Details  of  Laying  Out  Advertising  Space — 
Special  Selling  Campaigns — Service  Requirements — Main- 
tenance— Relations  with  Manufacturers — Sales  Managers' 
Reports — Graphic  Charts,  Budgets,  etc. — How  to  Analyze 
Merchandising  Accounts — Collection  and  Credit — Public 
Utilities. 

Course  5,  ACCOUNTING,  General  Principles  of  Accounting 
— Books  of  Original  Entry — Financial  Statements — Balance 
Sheet  or  Indicant  Accounts — Income  Accounts — Organiza- 
tion of  a  Gas  Company — Acquisition  of  Fixed  Assets — De- 
partmental Organization  of  the  Company — Beginning  of  Op- 
erations. First  Month — Sales  of  Gas,  By-Products,  Appli- 


CONTROL  OF  LABOR  263 

ances,  etc.  First  Month — Cost  of  Administering,  Financing, 
etc.  First  Month — The  Trial  Balance — Accounting  Trans- 
actions for  Five  Months — Closing  the  Books.  First  Six 
Months'  Period — The  Reorganization — Control  by  Public 
Service  Commissions — Branch  Accounting  and  Auditing. 

Extended  Course  5,  ACCOUNTING.  This  course  will  cover 
the  same  subjects  that  are  given  in  Course  5.  In  addition, 
however,  lessons  on  Public  Utilities  will  be  given,  including: 
Management — Financing — Organization — Operating — Inter- 
departmental Relations — Public  Relations. 

A  lesson  in  Business  English  is  given  with  each  lesson 
thruout  the  entire  course. 

Lesson  papers  and  test  questions  are  mailed  at  intervals 
of  one  month,  except  during  July  and  August. 

Test  questions  are  sent  with  each  lesson  paper.  The  ques- 
tions can  be  answered  after  a  study  of  the  lesson  paper. 

The  reference  papers  are  intended  for  reference  use  only, 
and  the  student  need  not  attempt  to  master  them  as  he  would 
the  lesson  papers. 

The  test  questions  are  graded  at  the  headquarters  of  the 
Association  and  returned  to  the  students  with  corrections 
and  suggestions. 

Each  course  consists  of  two  and  a  half  years'  instruction, 
and  a  diploma  will  be  awarded  at  the  end  of  that  time  to  all 
students  who  have  answered  the  test  questions  to  the  satis- 
faction of  the  Board  of  Educational  Control. 

The  educational  work  is  divided  into  three  divisions  or 
periods :  FIRST  PERIOD,  consisting  of  the  Introductory  Di- 
vision; SECOND  PERIOD,  consisting  of  the  first  ten  lessons  in 
each  specialized  course ;  THIRD  PERIOD,  consisting  of  the  re- 
maining lessons  of  the  specialized  course. 

Many  of  the  corporations  just  mentioned,  as  well 
as  hundreds  of  other  companies,  are  also  cooperating 
in  the  work  of  the  Alexander  Hamilton  Institute, 
which  need  not  be  here  described. 


264     FACTORY  AND  OFFICE  ADMINISTRATION 

REVIEW 

What  advantage  does  an  employer  of  labor  gain  if  he  can  get 
the  applicant  for  a  position  to  analyze  himself? 

What  are  the  moral  effects  of  a  system  of  labor  management 
that  provides  periodical  tests  of  the  ability  of  the  workers  and 
does  not  permit  a  man  to  waive  his  right  to  promotion? 

How  would  you  provide  for  an  employe  who  has  studied  and 
worked  hard  to  master  his  position,  but  who  has  not  materially 
increased  his  output? 

An  employe  has  followed  the  courses  of  instruction  provided 
by  the  firm  and  has  succeeded  in  proving  himself  to  be  a  $2,000 
man  instead  of  a  $1,000  man.  There  is  no  place  open  for  him 
in  the  way  of  advancement.  What  would  you  advise  in  his  case  ? 


CHAPTER  XX 

CONTROL  OF  LABOR— WAGES,  RECORDS  AND 
PROMOTIONS 

1.  High  cost  of  man-power. — The  difference  be- 
tween the  costs  of  man-power  and  of  machine  power 
is  tremendous.  Large  electric-power  companies 
quote  prices  of  10  cents  to  2  cents  per  kilowatt  hour; 
and  prices  as  low  as  0.5  cents  have  been  known 
where  electric  current  was  used  in  very  large 
quantities. 

A  man-power  has  been  estimated  to  be  equal  to 
about  one-tenth  of  a  horse-power.  On  the  basis  that 
a  kilowatt  is  1.34  horse-power,  and  that  labor  is  paid 
15  cents  an  hour,  it  is  figured  by  a  prominent  engi- 
neer that  human  physical  force  is  from  20.1  to  100.5 
times  as  expensive  as  electro-motive  force — the  force 
in  each  case  being  purchased  from  the  generator. 

The  most  significant  factor  in  the  development  of 
the  American  nation,  whether  we  look  at  the  subject 
from  the  political,  religious,  social  or  economic  side 
is  the  high  cost  of  man-power.  No  nation  is  likely 
to  advance  with  equal  rapidity  along  all  lines  at  once, 
for  that  element  in  a  nation's  life  matures  most 
quickly  which  calls  to  it  the  strongest  men.  Busi- 
ness, therefore,  in  America  has  been  able  to  over- 
shadow other  callings  because  it  could  pay  the  price. 

2(\5 


266     FACTORY  AND  OFFICE  ADMINISTRATION 

As  a  converse  proposition,  it  might  be  stated  that 
business  can  pay  the  price  because  it  has  drawn  to 
itself  the  highest  type  of  man-power,  the  intellect  of 
men.  Thinkers  and  leaders  in  the  economic  world 
have  seen  the  advantages  of  replacing,  where  possi- 
ble, the  high-priced  physical  human  labor  by  the 
cheaper  natural  forces.  Thus  business  itself  has  been 
modified  from  within  by  the  same  force  which  made 
it  the  leading  factor  in  our  civilization;  the  high  cost 
of  man-power  has  compelled  business  men  to  use 
steam,  electricity  and  water-power.  Few  managers 
today  need  to  be  told  that  the  most  efficient  way  to 
utilize  man's  physical  strength  is  to  employ  it  in  the 
control  of  machinery  by  which  the  work  is  actually 
performed.  The  locomotive  engineer  or  the  man 
who  manipulates  the  many-tonned  trip-hammer,  con- 
trols forces  thousands  of  times  greater  than  he  him- 
self could  exert. 

But  there  comes  a  time  in  all  progress  when  the  ad- 
vancement in  a  particular  direction  is  retarded  and 
when  every  gain  is  made  at  greater  and  greater  cost. 
This  is  the  case  at  present  in  the  basic  industries. 
Every  machine  needs  a  man  to  tend  it,  and  thus  there 
is  a  point  below  which  the  substitution  of  machinery 
for  men  cannot  go.  Realizing  this,  a  few  progressive 
managers  are  looking  in  new  directions  for  the  saving 
of  this  high-priced  man-power,  or  at  least  for  the 
more  economical  use  of  it. 

2.  Waste  of  human  power. — When  the  chief  con- 
cern of  the  manager  was  to  get  out  his  product,  no 


CONTROL  OF  LABOR  267 

matter  what  its  quality,  of  what  use  was  it  to  speak 
of  a  science  of  labor  control?  He  needed  men — the 
stronger  the  better.  The  industrial  frontier  was  ad- 
vancing by  leaps  and  bounds,  and  men  were  needed. 
Any  kind  would  do.  The  manager  seldom  ques- 
tioned closely  to  see  whether  an  applicant  was  "the 
man  for  the  job"  when  he  employed  him;  and  when 
he  dismissed  an  employe  he  assumed  that  the  man's 
failure  was  due  to  general  incompetence.  That  the 
workman  might  simply  be  a  "misfit"  never  occurred 
to  the  manager. 

The  frontier  days  of  business  are  gone.  "Big  kill- 
ings," with  primitive  methods,  are  now  as  scarce  in 
business  as  in  hunting.  It  is  time  that  some  of  the 
energy  of  investigations  be  turned  upon  the  question 
of  labor  adjustment — the  more  economical  use  of 
human  power.  Consider  the  efforts  of  our  schools, 
colleges  and  private  laboratories  to  solve  questions 
pertaining  to  mechanical  and  electrical  engineering; 
the  striving  to  produce  mechanical  refinements  and 
power-saving  appliances;  the  tests  of  coal,  oil  and 
other  fuels;  the  gauges  for  measuring  the  use  of 
power — and  then  consider  the  small  amount  of  effort 
used  in  investigating  the  use  and  conservation  of 
labor  power ! 

Some  years  ago,  late  in  1907,  in  a  very  large  machine  shop 
we  utilized  the  month  of  shut-down,  when  90%  of  the  em- 
ployes had  been  laid  off,  to  relocate  15%  of  the  machines  so 
as  to  facilitate,  expedite,  and  cheapen  production.  Nothing 
was  done  as  to  personnel,  altho  it  is  obvious  that  an  organ- 


268      FACTORY  AND  OFFICE  ADMINISTRATION 

izing  skill  that  could  instal  in  poor  locations  three-quarters 
of  the  machines,  would  also,  to  at  least  some  extent,  fill  the 
personal  positions  badly ;  and  so  it  proved,  for  when  business 
started  up  again  there  were  a  succession  of  demoralizing  and 
costly  strikes. 

Investigation  shows  that  in  most  industrial  plants  at  least 
three-quarters  of  the  men  are  badly  placed,  which  does  not 
in  the  least  mean  that  the  men  are  undesirable.  An  intelli- 
gent readjustment  and  reassignment  of  positions  without 
discharge  may  improve  the  efficiency  of  a  plant  30%  to  40%. 

Efficiency  tests  and  analyses,  tests  of  operation,  not  of  or- 
ganization, always  show,  among  the  day  wage-earners  in  the 
same  plant,  individual  variations  between  30%  and  120%  ; 
the  extremes  of  actual  test  on  a  whole  month's  work  being 
7%  and  210%.  The  210%  man  was  evidently,  by  accident 
or  choice,  extremely  well-fitted  to  his  work;  the  7%  man  was 
equally,  by  accident  or  choice,  extremely  poorly  fitted  to  his 
work.  Operation  can  gradually,  in  the  course  of  months  and 
years,  eliminate  men  of  low  efficiency,  and  by  experiment  and 
test  and  successive  discharges  replace  them  with  men  of 
higher  efficiency.  In  this  way  it  is  possible  in  the  course  of 
three  or  four  years  to  bring  the  efficiency  of  operation  up 
from  50%  to  100%,  but  as  an  element  in  organization  it  is 
possible  by  predetermination  of  aptitudes  to  curtail  the  time 
very  greatly  and  in  the  end  secure  a  better  personnel.1 

3.  Period*  of  rest  and  relaxation. — While  it  is  true 
that  experiments  have  shown  that  a  man-power  is 
equivalent  to  about  one-tenth  of  a  horse-power,  there 
are  elements  in  labor  power  that  do  not  need  to  be 
considered  in  determining  mechanical  efficiency.  A 
man  is  spending  his  own  energy,  first  for  himself,  and 
then  indirectly  for  the  benefit  of  the  manager.  When 
a  man  reaches  the  fatigue  point,  the  consequences  of 

i  Harrington  Emerson,  in  address  before  the  Efficiency  Society,  annual 
meeting,  1913. 


CONTROL  OF  LABOR  269 

continued  labor  are  something  more  than  slackened 
production;  he  is  robbing  himself  of  his  health — the 
storage  battery  of  his  working  power.  It  is  at  this 
point  that  employers  of  labor  need  more  knowledge 
of  the  relationship  which  should  exist  between  the  pe- 
riods of  rest  and  relaxation  for  "different  volumes  of 
load"  carried  by  the  laborers.  They  should  be  able  to 
see  how  to  adjust  these  periods  in  the  predetermina- 
tion of  industrial  operations  so  as  to  obtain  the  maxi- 
mum of  work  without  exceeding  the  "elastic  limit"  of 
the  employe.  It  was  along  this  line  that  Mr.  F.  W. 
Taylor  conducted  some  of  his  most  important  investi- 
gations. He  not  only  recognized  that  the  working- 
time  units  must  be  separated  from  the  resting-time 
units,  but  he  was  the  first  to  point  out  that  the  differ- 
ent kinds  of  work  require  different  percentages  of 
rest,  according  to  the  kind  and  nature  of  the  work 
done. 

Altho  little  work  has  as  yet  been  done  along  this 
line,  there  are  evidences  of  much  interest  in  the  deter- 
mination of  a  fair  day's  work.  Time  studies,  fatigue 
studies,  work  records,  etc.,  are  growing  quite  common, 
and  their  results  all  bear  on  the  determination  of  a  fair 
day's  work. 

4.  A  fair  day's  pay. — Closely  associated  with  the 
problem  of  a  fair  day's  work  is  the  question  of  a  fair 
day's  pay.  They  are  the  two  sides  of  the  same  shield. 
The  employer  sees  one  side;  the  employe  the  other. 
It  will,  however,  be  a  comparatively  simple  thing  to 
determine  a  fair  wage  when  we  know  how  to  estimate 

IV— 19 


270     FACTORY  AND  OFFICE  ADMINISTRATION 

the  labor  involved.  Yet  there  are  other  elements  to 
be  considered  besides  the  amount  of  energy  expended 
by  the  laborer,  and  the  rate  per  day  that  he  is  paid  by 
the  manager.  These  are  (1)  steadiness  of  employ- 
ment, (2)  permanency  of  employment  and  (3)  future 
prospects. 

Altho  American  business  men  proved  to  the  world 
that  high  wages  do  not  necessarily  mean  high  costs  of 
production,  it  seems  difficult  for  many  employers  to 
see  the  application  of  this  principle  when  they  are 
brought  face  to  face  with  the  question  of  labor  costs  in 
their  own  store  or  factory.  They  see  the  "wages 
paid"  but  forget  the  "output."  "Wages  paid"  are 
high  or  low,  according  to  the  size  of  the  output ;  "wages 
received"  are  high  or  low,  in  proportion  to  the  time 
which  the  laborer  takes  to  do  the  work.  The  combina- 
tion of  low  wages  given  with  high  wages  received 
would  prove  to  be  ideal. 

5.  Illustrations. — CASE  I:  Assume  that  a  work- 
man turns  out  ten  units  of  a  given  product,  for  which 
he  is  paid  $3  a  day.  The  upkeep,  interest  and  de- 
preciation of  his  machine  amount  to  $6  a  day.  The 
factory  overhead  cost,  distributed  to  either  the  man  or 
the  machine,  is  $1.50  a  day.  The  material  required 
for  the  ten  units  costs  $7.50.  While  this  is  purely  a 
supposition,  the  proportions  are  typical.  The  cost  is 
$1.80  for  each  piece.  In  the  form  of  a  simple  equa- 
tion the  results  work  out  as  follows: 

Labor  -f-  Machine  -J-  Overhead  -j-  Material  =  Cost 


CONTROL  OF  LABOR  271 

This  equals  a  piece-rate  of  30  cents  of  wages  to  the 
workman.  If  the  employe  can  be  induced  to  increase 
his  output,  the  more  he  makes  the  cheaper  becomes  the 
cost. 

CASE  II:  If  the  workman  earns  $4.50  by  increas- 
ing his  output  by  one-half,  the  cost  per  unit  of  product 
drops  to  $1.55. 

Labor  -f  Machine  -(-  Overhead  -|-  Material  =  Cost 
" 


+  +    $0.75     =$,.55 

lo  lo 

CASE  III:     If  he  earns  $6  by  doubling  his  output, 
the  cost  drops  to  $1.42%. 

Labor  -|-  Machine  -}-  Overhead  _j_  Material  =  Cost 
$0.30+     !22    +  +    $0.75      = 


CASE  IV:  If,  however,  the  employe  cannot  be  in- 
duced to  exert  himself,  except  by  means  of  a  higher 
piece-rate,  say  35  cents  for  each  piece,  it  will  still  be 
real  economy  to  allow  the  increase.  Tho  the  work- 
man would  earn  the  high  wages  of  $5.25  and  $7  per 
day,  the  original  cost  of  $1.80  would  fall  to  $1.60  with 
the  lower,  and  $1.47%  with  the  higher  earnings. 

CASE  V:  Suppose,  in  Cases  II  and  III,  that  in 
order  to  increase  the  output  50  per  cent  it  is  necessary 
to  increase  the  office  force  and  to  supply  storeroom 
clerks,  etc.  This  makes  the  overhead  rise  to  $2  a 
day.  The  cost  would,  nevertheless,  drop  to  $1.63% 
in  Case  II,  and  $1.50  in  Case  III. 

Labor  -{-  Machine  -f-  Overhead  -f-  Material  =  Cost 
$0.35  +     !2    +          22      +     $0.75     =$1.63% 


$0.35  +  +  +     $0.75      =$1.50 


272     FACTORY  AND  OFFICE  ADMINISTRATION 

If,  however,  which  is  the  more  probable  supposi- 
tion, the  rate  should  be  made  25  cents  instead  of  35 
cents  the  saving  would  become  even  more  marked. 

Labor  -|-  Machine  -J-  Overhead  -}-  Material  =  Cost 


$0.25+     rgp    +     =     +    $0.75     =  $1.53% 


CASE  VI  :  Or  suppose  a  bonus  system  is  adopted  ; 
the  man  continues  at  $3  a  day,  but  is  allowed  50 
per  cent  of  the  time  that  he  saves,  as  a  bonus.  This 
distributes  the  cost  as  follows  : 

Illustration  (a)  where  there  is  a  50  per  cent  increase  in  output. 
Labor  -|-  Machine  -f  Overhead  -}-  Material  =  Cost 
$0.25  -f    $0.40    4-   $0-13%     +    $°-75     =$1^3% 
Illustration  (b)  where  there  is  a  doubled  output, 

piece. 


Labor  -f-  Machine  -f-  Overhead  4.  Material  =  Cost 

'     -j-     $0.10     +    $°-75     =$1-371/2 


It  will  be  noticed  that  the  machine  and  overhead 
charges  are  constant,  irrespective  of  output.  If  a 
$3  a  day  man  idles  for  half  an  hour  the  loss  is  not 
the  18  cents  that  he  receives,  but  the  $7.50  -r- 16  =  45 
cents,  loss  in  machine  and  overhead.  If  the  man  is  on 
piece-rate,  there  is  no  loss  in  wages  when  he  slows  up, 
but  the  machine  cost  of  45  cents  is  still  there. 

6.  Special  factors  influencing  wages. — The  amount 
of  increase  of  wages  over  the  customary  payment 
necessary  to  induce  a  man  to  appreciate  his  job  and  to 
take  care  of  it,  must  be  found  by  trial.  If  it  is  not 
ample,  the  men  will  decline  "to  be  worked,"  as  they 
express  it,  and  the  plan  fails.  If  it  is  too  much,  the 


CONTROL  OF  LABOR  273 

men  sometimes  become  irregular  about  coming  to 
work,  and  may  fall  into  habits  of  dissipation.  If  the 
happy  medium  is  attained  the  workman  becomes 
steadier,  lives  better  and  accumulates  property.  The 
proper  rates  of  increase  given  by  Mr.  F.  W.  Taylor 
are: 

Light  work  calling  for  no  special  fatigue,  such  as 
ordinary  shop  practice — 30  per  cent. 

Ordinary  labor,  calling  for  strength  and  severe 
bodily  exertion  and  fatigue — 50  to  80  per  cent. 

Special  skill  or  brains,  with  close  application,  but 
requiring  no  bodily  exertion — 70  to  80  per  cent. 

Skill,  brains,  close  application  and  extreme  rack 
and  bodily  exertion,  such  as  are  required  in  running  a 
steam  hammer — 80  to  100  per  cent. 

Other  industrial  engineers  agree  approximately  on 
these  increases,  and  Mr.  Taylor  pertinently  remarks 
that  they  are  not  quantities  to  be  theorized  over  by 
boards  of  directors,  but  are  facts  determined  by  costly 
experiments. 

The  workman  is  interested  in  his  total  day's  pay, 
and  not  in  the  unit  in  which  it  is  figured.  The  stand- 
ard illustration  of  this  fact  is  the  case  of  the  ore  shov- 
elers  at  the  Bethlehem  Steel  Works.  They  were  paid 
3.2  cents  per  ton  for  unloading  iron  ore  from  cars. 
Pittsburgh  companies  were  paying  4.9  cents  per  ton 
for  the  same  work.  Hearing  of  this,  the  Bethlehem 
gang  all  quit  and  went  to  Pittsburgh.  The  condi- 
tions there,  however,  were  such  that  they  could  not 
maintain  their  output,  and  their  total  earnings  fell  off. 


274     FACTORY  AND  OFFICE  ADMINISTRATION 

Within  four  weeks  the  entire  gang  was  back  at  Beth- 
lehem, glad  to  work  at  the  lower  rate,  under  which 
their  total  earnings  were  greater. 

The  wage  system  must  be  so  established  that  the 
self-interest  of  the  workman,  and  the  interest  of  the 
company  will  correspond.  There  should  be  no  con- 
fusion of  the  issue  with  hypocritical  sentiment.  Both 
the  employer  and  the  workingman  are  working  for 
their  own  interests;  and  they  work  together  because 
they  can  thus  best  further  their  own  ends.  The 
simplest  way  to  get  a  man  to  exert  himself  is  to  make 
it  to  his  personal  interest  to  do  so.  Each  man  must 
be  treated  as  an  individual  and  rewarded  in  propor- 
tion to  his  individual  exertions. 

7.  Wages  the  chief  incentive. — The  amount  of 
money  paid  a  man  for  his  work  is  more  important, 
from  the  manager's  point  of  view  of  business  policy, 
than  the  actual  payment  which  may  include  many 
things  besides  money — for  example,  free  lunches,  use 
of  gymnasium,  libraries,  etc.  But  the  money  which 
a  laborer  receives  is  his,  to  do  with  as  he  pleases.  It 
is  this  bit  of  absolute  possession  that  appeals  to  every 
man.  Therefore,  it  is  a  wise  manager  who  lets  as 
much  as  possible  of  his  labor  policy  show  in  the  wages 
envelop.  It  was  this  knowledge  of  human  nature 
that  led  Napoleon  to  counsel  his  brother  Joseph, 
"The  first  thing  to  be  done  is  to  allow  no  arrears  in 
the  pay  of  your  forces."  For  a  manager  to  institute 
industrial  betterment,  medical  service,  etc.,  etc.,  be- 


CONTROL  OF  LABOR  275 

fore  he  has  worked  out  a  satisfactory  wage  system  is 
simply  to  waste  his  efforts. 

8.  Importance  of  short-period  records. — Men  love 
independence,  and  cash  gives  it.  But  having  estab- 
lished a  working-wage  system,  it  is  well  to  apply  all 
the  aids  available  to  stimulate  the  labor  force  to  high 
endeavor.  Modern  psychology  is  furnishing  many 
suggestions  along  this  line.  Among  them  are  two 
which  are  worthy  of  special  mention. 

Trainers  of  bicycle  riders  discovered  that  the  rec- 
ords made  when  a  man  was  merely  riding  against  time 
were  poorer  than  when  the  man  was  accompanied  by  a 
pace-maker.  More  than  that,  he  showed  less  exhaus- 
tion when  making  the  paced  record  than  when  riding 
more  slowly  alone.  The  presence  of  the  pace-maker 
had. this  effect.  Man  needs  society  in  order  to  do  his 
best  work,  and  if  he  has  some  means  of  comparing  his 
accomplishments  at  different  stages  with  a  known 
standard,  he  can  call  on  his  reserve  forces  without  the 
same  fatigue  which  accompanies  a  solitary  perform- 
ance and  a  slight  knowledge  of  the  progress  he  is 
making.  The  ultimate  goal  is  usually  too  far  away 
to  offer  the  stimulus  necessary  to  high  accomplish- 
ment. This  principle  has  been  applied  by  some  man- 
agers in  allowing  their  bosses  to  post  a  record  from 
time  to  time  during  the  working  day,  showing  each 
man  just  what  he  is  accomplishing. 

The  effect  of  a  record  of  this  kind  has  been  measured 
in  the  laboratory  upon  a  university  athlete,  and  it 


276     FACTORY  AND  OFFICE  ADMINISTRATION 

shows  that  under  this  method  great  gains  in  endurance 
are  made  without  evil  effects.  A  college  man  was  set 
the  task  of  testing  the  strength  of  his  hand  by  grip- 
ping a  contrivance.  His  first  set  of  performances 
were  completed  with  absolute  exhaustion.  Later  on, 
under  exactly  similar  circumstances  he  was  given  an- 
other test,  but  now  he  was  provided  with  a  record  of 
each  effort  showing  just  how  much  he  exceeded  or  fell 
below  his  previous  record  at  that  point.  The  result 
showed  that  this  extra  stimulation  raised  his  efficiency 
over  33%  per  cent. 

The  best  example  in  business  of  capitalizing  this 
spirit  of  competition  or  emulation  inherent  in  all  men, 
is  seen  in  Mr.  Gilbreth's  methods  of  handling  his 
bricklayers.  At  regular  periods  the  accomplishment 
of  each  man  was  posted  alongside  the  standard  re- 
quirements. 

9.  Pleasurable  surroundings. — Another  psycho- 
logical factor  that  plays  an  important  part  in  the 
efficiency  with  which  men  work,  is  the  element  of 
pleasure.  Buoyant  spirits  and  pleasurable  thoughts 
have  a  decided  effect  on  the  physical  well-being  of 
man,  just  as  they  have  upon  his  temperament.  The 
heart  works  better  and  the  circulation  of  the  blood  is 
more  free,  when  a  man  is  happy  and  contented.  The 
basis  of  good  nutrition  is  laid  and  health  is  affected 
directly. 

On  the  other  hand,  fear  contracts  the  blood  vessels 
and  checks  the  flow  of  the  blood.  The  close  connec- 
tion between  the  mental  state  and  the  physical  con- 


CONTROL  OF  LABOR  277 

dition  is  strikingly  shown  in  the  slang  phrase,  "cold 
feet."  Fear  lowers  the  working  ability  of  man.  A 
girl  who  worked  with  her  back  to  a  passageway  be- 
side which  her  machine  stood  was  about  to  be  dis- 
charged because  her  work  was  not  up  to  the  standard 
in  quality  or  quantity.  The  foreman,  however,  de- 
cided to  let  her  remain  and  to  watch  her.  He  found 
that  every  time  a  truck  or  box  was  hauled  behind  her 
she  involuntarily  started  and  slackened  her  pace. 
She  was  placed  in  a  quiet  part  of  the  room  and  there 
became  the  most  efficient  employe  in  that  department. 

10.  Chilly  surroundings  develop  fear. — But  if  fear 
causes  "cold  feet,"  the  reverse  of  the  proposition  is 
just  as  true.  The  full  effects  of  warm  and  hygienic 
surroundings  are  not  appreciated  until  the  influ- 
ence which  these  conditions  have  upon  the  minds  of 
the  employes  is  seen.  Warmth  of  body  reduces  the 
tendencies  to  fear  and  dread.  With  these  gone,  sus- 
picion and  connivance  diminish  also.  The  manager's 
problem  of  lessening  the  number  of  "discontents"  in 
his  factory,  shop  and  office  is  thus  in  part  solved  by 
making  the  employes'  surroundings  pleasant  and  com- 
fortable. 

This  solution  is  not  offered  as  a  panacea,  but  em- 
phasis has  been  placed  upon  the  point  because  the  in- 
fluence of  industrial  betterment  upon  the  efficiency 
of  the  worker  would  be  little  indeed  if  it  stopped  with 
the  physical  effects  produced  upon  the  bodies  of  the 
men,  and  did  not  emphasize  the  mental  effects  condi- 
tioned by  them.  The  man  whistling  at  his  work  is 


278      FACTORY  AND  OFFICE  ADMINISTRATION 

more  efficient  than  the  same  man  shivering  over  his 
task.  The  philosophy  of  industrial  betterment  rests 
on  the  fact  that  the  body  and  the  mind  act  and  react 
upon  each  other. 

11.  Stimulating  self-interest. — The  pay  envelop 
does  not  draw  to  itself  all  the  lines  of  self-interest 
which  determine  a  man's  attitude  toward  his  work. 
Employes  are  interested  in  their  records  as  workmen. 
If  a  man  does  good  work  he  is  stimulated  to  repeat  it 
or  to  surpass  previous  efforts,  provided  he  receives  due 
credit.  Nothing  is  more  disastrous  to  individual  ef- 
fort than  to  elevate  the  shirk  and  overlook  the  in- 
dustrious man.  The  management  must  use  some 
method  whereby  the  individual's  work  is  not  merged 
with  that  of  the  mass  and  lost  sight  of.  But  to  treat 
men  individually,  the  work  must  be  carefully  allotted 
and  an  individual  record  must  be  kept.  This  method 
has  two  good  effects :  ( 1 )  it  assures  the  workman  of  a 
fair  deal;  (2)  it  becomes  the  means  of  eliminating 
poor  men.  The  manager  can  keep  tab  on  his  fore- 
man's appointments,  and  thus  assure  the  workman 
that  his  work  is  constantly  under  review  in  the  head 
office.  If  the  manager  or  superintendent  wishes  to 
take  advantage  of  this  system,  he  can  refer  to  these 
records  and  whenever  he  sees  an  opportunity  to  praise 
an  employe  he  can  walk  thru  the  shop  or  office  and  by 
casually  greeting  the  man  and  referring  to  the  par- 
ticular praiseworthy  accomplishment,  he  can  in  time 
bind  all  the  good  men  to  him  in  interested  loyalty. 

12.  Checks  against  injustice. — Furthermore,  work- 


CONTROL  OF  LABOR  ,        279 

men's  records  become  vital  aids  in  helping  to  do  away 
with  jealousies  and  injustices  attendant  on  promo- 
tions. They  force  the  foremen  to  depend  upon  some 
principle  other  than  consanguinity,  the  "softsoap 
grip,"  or  petty  tribute,  in  making  promotions.  They 
know  that  their  recommendations  must  stand  the  test 
of  recorded  efficiency.  A  manager  who  suspects  his 
foreman  of  "playing  favorites"  can  compare  his  rec- 
ommendations with  the  records  of  other  men  entitled 
to  consideration.  Without  removing  the  foreman's 
power  of  promoting  a  man  he  can  call  him  to  the  of- 
fice and  say,  "Smith,  I  understand  there  is  to  be  a 
vacancy  in  your  department."  "Oh!  yes,"  says 
Smith.  "Well,"  says  Mr.  Manager,  "we  have  sev- 
eral good  men  down  there ;  let  us  look  over  their  rec- 
ords." Now  the  manager  knows  that  Smith  intended 
to  recommend  a  worthless  cousin  for  the  job.  Such 
an  appointment  would  hurt  the  discipline  of  the  de- 
partment as  well  as  cripple  its  productive  efficiency. 
But  he  does  not  want  to  curtail  the  power  of  his  fore- 
man. So  they  look  over  the  record  cards  of  the  men. 
The  cousin's  record  stands  out  in  bold  contrast  to  that 
of  the  good  men  working  by  his  side,  who  know  how 
incapable  he  is  and  that  he  is  related  to  the  boss. 

The  manager  does  not  counsel  his  foreman,  but  the 
latter  knows  that  he  will  be  held  responsible  for  this 
appointment.  If  the  foreman  were  willing  to  take 
the  responsibility,  the  manager  could  not  object  until 
the  result  of  the  foreman's  appointment  showed  in  the 
record.  Smith  does  not  recommend  his  cousin  for  the 


280     FACTORY  AND  OFFICE  ADMINISTRATION 

position,  and  every  man  in  the  department  is  stimu- 
lated to  do  better  work  because  he  feels  he  is  going  to 
be  judged  by  his  record  and  get  a  fair  deal. 

13.  Elimination  of  the  unfit. — The  second  use  to 
which  a  record  may  be  put  is  the  gradual  elimination 
of  the  inefficient  and  the  acquisition  of  a  permanent 
staff.     The  record  substitutes  exact  data  for  impres- 
sions and  other  intangible  influences  at  times  when 
men  are  to  be  laid  off.     On  this  point  Mr.  Gantt  says : 

Some  years  ago  it  became  necessary  to  lay  off  about  ten 
molders  in  a  foundry.  The  superintendent  sent  for  the  rec- 
ord of  the  men  and  made  up  a  list  of  men  to  be  laid  off. 
There  was  great  complaint,  in  which  the  foreman  joined,  that 
the  wrong  men  had  been  selected  and  that  some  of  these  men 
were  the  best  workers  in  the  shop.  The  superintendent  in- 
vited an  inspection  of  the  records,  which  the  foreman  had 
never  been  willing  to  pay  any  attention  to  before,  with  the  re- 
sult that  everybody  was  satisfied  and  the  efficiency  of  those  re- 
maining soon  showed  a  very  marked  improvement. 

14.  A  typical  case  of  the  use  of  records. — It  is  per- 
haps natural  that  the  railroads  should  be  foremost  in 
developing  systems  of  discipline  for  their  employes. 
Slackness  in  railroad  operation  may  result  in  fatal  ac- 
cidents, as  well  as  in  loss  of  profits.     The  old  system 
of  discipline  by  suspension  from  duty  has  been  quite 
generally  displaced  by  the  system  of  "discipline  by 
records." 

Mr.  H.  H.  Vreeland,  when  president  of  the  old 
Metropolitan  Street  Railway  Company  of  New  York 
City,  described  this  system  as  applied  to  his  company. 
Mr.  Vreeland  stated  that  in  this  organization,  which 


CONTROL  OF  LABOR  281 

employed  15,000  men,  the  whole  force  practically  re- 
newed itself  every  two  years  before  the  new  methods 
were  adopted.  There  were  not  fifty  men  who  had 
been  with  the  company  five  years.  Division  superin- 
tendents could  discharge  men  whom  they  had  never 
seen,  and  the  idea  that  a  man  might  offer  a  defense 
never  suggested  itself.  No  account  was  kept  of  a 
man's  .discharge  and  he  might  be  hired  again  in  a  few 
days.  Soon  after  the  record  system  was  installed 
improvement  in  the  conduct  of  the  men  became 
marked.  They  felt  in  closer  touch  with  the  manage- 
ment and  knew  that  each  had  an  equal  chance,  for 
they  knew  that  altho  their  errors  were  noted,  their 
good  work  was  recorded  as  well. 

15.  Permanency  of  employment,  and  pensions. — 
The  readiness  with  which  a  skilled  mechanic  will  some- 
times leave  his  trade,  in  which  he  can  earn  $5  a  day, 
to  enter  an  office  at  $75  per  month  shows  how  strong 
is  the  influence  of  permanency  in  a  job.  Small  com- 
panies often  compete  favorably  for  labor  with  big- 
ger firms  because  they  take  care  of  their  workingmen 
during  slack  times.  In  some  large  concerns  the 
power  to  discharge  a  man  as  a  matter  of  discipline  is 
resorted  to  only  in  exceptional  cases.  The  Pennsyl- 
vania Railroad  Company's  records  show  that  1,350 
active  employes  have  been  with  the  company  forty 
years  or  more;  and  there  are  1,013  men  who,  having 
served  over  forty  years,  have  retired  on  pensions. 

So  strong  has  the  idea  of  stability  of  employment 
grown  of  late  years  that  hundreds  of  big  corporations 


282     FACTORY  AND  OFFICE  ADMINISTRATION 

have  adopted  some  form  of  pension  system.  By  this 
means  they  hope  to  make  the  men  better  satisfied  with 
their  work.  Many  kinds  of  old-age  pensions  have 
been  formulated,  but  the  commonest  forms  are  those 
which  provide  for  the  retirement  of  the  employe  after 
a  certain  period  of  service  in  the  company,  or  at  a 
specified  age.  The  amount  of  the  pension  is  based 
on  a  stated  percentage  of  the  average  income  of  the 
recipient,  covering  a  number  of  years  just  previous 
to  his  retirement  multiplied  by  the  number  of  years  of 
service.  Another  method,  tho  less  common,  is  the 
payment  of  fixed  sums  instead  of  an  amount  figured 
on  the  actual  time  of  service. 

The  Pennsylvania  Railroad  Company  was  the 
pioneer  in  establishing  a  pension  system.  Their  sys- 
tem is  the  result  of  an  elaborate  investigation  of  the 
experience  of  foreign  railroad  corporations.  Sev- 
eral arrangements  were  considered,  and  finally  the 
best  was  adopted.  Since  its  introduction,  January  1, 
1900,1  it  has  been  a  model  which  both  railroad  and  in- 
dustrial organizations  have  followed. 

16.  Hope  of  advancement  as  a  stimulus. — So 
strong  is  the  desire  of  most  young  Americans  to  ad- 
vance, that  many  concerns  make  a  practice  of  hold- 
ing out  glowing  possibilities  to  ambitious  men,  and 
at  the  same  time  they  expect  them  to  work  at  first  for 
very  small  wages.  Where  the  firm  is  sincere  in  its 
promises  no  employe  will  complain,  but  it  is  nothing 
more  than  obtaining  services  under  false  pretenses  to 

i  See  U.  S.  Dept.  of  Labor  Bulletin,  1901,  p.  1090. 


CONTROL  OF  LABOR  283 

get  the  best  out  of  an  ambitious  man  and  then  let  him 
go  when  he  can  be  deceived  no  longer. 

One  has  only  to  run  thru  the  list  of  "situations 
wanted"  in  a  morning  paper  to  see  how  prevalent  is 
the  willingness  of  employes  to  sacrifice  money  returns 
if  only  steady  advancement  is  assured.  Out  of  a  total 
of  1,129  situations  wanted,  advertised  in  one  paper, 
over  12  per  cent  of  the  applicants  emphasized  the 
"future."  In  another  paper,  14  per  cent  of  the  "com- 
mercial help  wanted"  ads  referred  to  "chances  of  ad- 
vancement." 

"Don't  go  outside  to  fill  a  vacancy  if  you  can  help 
it,"  is  a  policy  now  generally  accepted  as  the  best. 
Strict  seniority,  however,  is  apt  to  drive  out  the  men 
of  force  and  initiative.  Accordingly,  some  firms  dis- 
regard the  strict  rule  of  seniority  by  confining  its  ap- 
plication chiefly  to  the  minor  positions,  the  higher 
offices  being  quite  free  from  its  influence. 

REVIEW 

What  conditions  in  America  and  to  a  lesser  degree  in  Europe 
are  forcing  managers  to  a  scientific  study  of  the  cost  of  man- 
power ? 

Employers  of  labor  are  considering  the  subject  of  "misfits" 
on  the  job  with  greater  interest  than  they  did  a  few  years  ago. 
Why  is  this? 

What  argument  can  you  give  for  a  division  of  the  labor  units 
into  resting-time  units  and  working-time  units  ? 

In  your  estimation,  what  would  be  the  economic  and  social 
effects  if  business  men  knew  what  a  fair  day's  work  consisted 
of,  and  acted  accordingly? 

Under  ordinary  conditions  what  drawback  exists  when  a  man- 
ager raises  the  wages  of  his  employes  far  above  the  customary 
rates  ? 


284      FACTORY  AND  OFFICE  ADMINISTRATION 

How  can  a  manager  keep  fully  informed  of  the  character  of 
the  workingmen  in  the  various  departments,  and  still  hold  his 
foremen  responsible  for  the  selection  and  control  of  them? 

What  relation  is  there  between  an  employe-pension  system 
and  stability  of  employment? 

Why  do  employers,  in  taking  on  new  men,  often  say,  "The 
wages  will  be  small,  but  the  chances  for  promotion  are  good"? 


CHAPTER  XXI 

SOURCES  OF  ADMINISTRATIVE  INFORMATION 
STATISTICS  AND  INSPECTION 

1.  Use  of  statistics. — Only  when  statistics  can  be 
employed  progressively  are  they  effective.     It  is  not 
so  important  that  past  conclusions  be  confirmed  by 
statistics  as  it  is  that  deductions  for  the  future  be 
correctly  drawn.     Only  when  they  take  on  the  latter 
character  may  they  be  said  to  be  vitalized. 

Among  the  monthly  reports  of  the  Harriman  lines 
is  one  of  particular  interest  because  it  looks  forward 
instead  of  backward.  It  asks  not  for  an  explanation 
of  the  unsatisfactory  conditions  shown  by  the  figures, 
but  for  a  statement  of  what  action  has  been  taken  to 
correct  them. 

R.  R Division. 

19.... 

General  Superintendent : 

Dear  Sir. — I  transmit  herewith  explanations  of  fluctu- 
ations in  operating  expenses  for 19 .  .  .  . ,  com- 
pared with  the  same  period  of  previous  years,  having  per- 
sonally reviewed  the  month's  exhibit. 

The  fluctuations  are  regarded  by  me  as  unsatisfactory, 
and  I  have  taken  action  to  improve  results  in  future  periods. 

2.  Graphs  and  statistics. — The  graphic  method  of 
presenting  statistics,  tho  inferior  to  the  numerical  in 
accuracy,  has  the  advantage  of  enabling  the  eye  to 

IV — 20  285 


286     FACTORY  AND  OFFICE  ADMINISTRATION 

take  in  at  once  a  series  of  facts.  This  advantage  is  not 
of  first  importance  when  we  are  considering  only  one 
set  of  facts.  Accuracy  is  then  more  essential  than 
ease  and  rapidity  of  representation.  But  ease  and 
rapidity  are  essential  when  we  want  to  compare  many 
sets  of  facts,  because  if  the  mind  is  hampered  in 
getting  the  general  effect  of  one  set,  it  loses  count 
of  the  others.  The  function  of  the  graphic  method 
is  the  comparison  of  different  sets  of  statistics.  A  for- 
mer president  of  the  New  York  Central  told  the  New 
England  Railway  Club  how  a  simple  use  of  graphic 
charts  saved  the  road  $2,000,000. 

Thirty  years  ago  we  built  four  grain  elevators  in  Buffalo. 
In  1909,  it  became  necessary  to  rebuild  them,  and  two  mil- 
lion dollars  were  appropriated.  However,  I  had  an  analysis 
made  of  the  grain  business,  and  plotted  a  chart  of  the  curves 
of  production  and  consumption.  Those  lines  cross  at  1913, 
meaning  the  probable  end  of  exporting  grain,  and  we  decided 
to  spend  only  $80,000  and  merely  repair  the  existing  ele- 
vators. 

3.  Indicating  relation  of  one  set  of  facts  to  an- 
other.— Another  function  of  graphic  charts  is  the  in- 
dication of  the  true  relation  of  one  set  of  facts  to 
another.  For  instance,  it  is  known  that  cost  varies 
with  output.  In  starting  a  new  business  or  shaping 
new  plans  it  might  be  desirable  to  know  just  what 
this  variation  was  likely  to  be  in  order  to  estimate 
how  much  business  would  be  necessary  to  overcome 
the  initial  expenses,  and  what  profit  should  be  realized 
from  a  given  volume  of  business.  A  chart  will  show 


STATISTICS  AND  INSPECTION  287 

far  more  clearly  than  statistical  tables  the  variations 
of  two  factors  in  relation  to  each  other. 

4.  Comparisons  of  time  periods. — Still  a  third  class 
of  information  which  can  be  advantageously  studied 
with  the  aid  of  curves  is  that  which  involves  compari- 
son from  month  to  month  of  such  items  as  costs,  sales, 
output,  etc.  Almost  any  kind  of  information  can  be 
plotted  with  time  as  the  horizontal  coordinate,  and  the 
desired  information  as  the  vertical.  Curves  repre- 
senting succession  units  of  time  are  most  convenient 
when  they  read  from  left  to  right.  The  advantage  is 
that  the  curve  can  be  kept  up  to  date,  and  that  com- 
parisons with  previous  and  standard  conditions  are 
grasped  more  easily  and  present  the  results  over  a 
long  period  of  time.  For  instance,  the  average  mar- 
ket price  of  a  product  for  every  business  day  in  the 
year  can  be  shown  in  much  less  space  than  is  possible 
in  any  other  way.  In  the  matter  of  output,  sales, 
costs,  etc.,  it  is  customary  to  carry  in  addition  to  the 
quantity  for  the  period,  the  cumulative  total  for  the 
year.  The  height  of  this  curve  always  shows  the  total 
business  to  date,  and  its  slope  shows  whether  the 
tendency  is  for  the  volume  to  increase,  remain  station- 
ary or  fall  off.  Conditions  making  for  or  against  im- 
provement may  thus  be  understood  sooner  than  they 
would,  be  if  tabulations  of  figures  were  used.  Note, 
for  instance,  how  quickly  you  catch  in  Figure  13 
(page  288)  the  relation  between  orders  and  shipment. 
In  it  are  also  shown  a  cumulative  total  and  the  plotting 
of  two  or  more  curves  to  scale  on  the  same  chart. 


288      FACTORY  AND  OFFICE  ADMINISTRATION 


H 

3  S 


8s- 


V 


- 


A 


X\ 


FIGURE    13.— GRAPHIC   REPRESENTATION   OF   RELATIONS   BETWEEN   ORDERS 
AND  SHIPMENTS  IN  A  MANUFACTURING  CONCERN.I 

i  Reproduced  by  permission  from  Woods'  "Reports  on  Industrial  Or- 
ganization, Systematization  and  Recounting." 


STATISTICS  AND  INSPECTION  289 

5.  Reports. — Reports  from  subordinate  officers  to 
the  management  are  the  most  common  means  of  col- 
lecting information.  The  trouble  with  them  in  most 
cases  is  that  they  are  too  long  delayed  to  be  of  real 
service.  This  need  not  be  the  case;  reports  can  be 
kept  up  to  date.  All  that  is  needed  is  a  time  schedule. 
The  payroll,  to  give  a  familiar  illustration,  is  always 
complete  at  the  end  of  the  week,  because  the  men  must 
be  paid  at  noon,  but  the  cost  department,  using  the 
same  data  and  doing  the  same  work,  merely  making 
the  debit  instead  of  the  credit  entry,  is  allowed  to  fall 
a  month  or  more  behind  in  its  work.  In  fact,  the  only 
difficulty  in  keeping  a  department  up  to  the  minute 
lies  in  catching  up  at  the  beginning.  The  depart- 
ment that  is  regularly  three  months  behind  is  hand- 
ling a  full  day  every  day ;  otherwise  it  would  continue 
to  fall  behind  instead  of  remaining  regularly  three 
months  in  arrears.  After  it  has  once  caught  up,  the 
same  effort  will  enable  it  to  stay  caught  up.  In  fact, 
work  that  is  up  to  date  is  more  easily  handled;  since 
errors  or  discrepancies  are  readily  detected  while  the 
matter  is  still  in  mind,  they  are  difficult  to  get  at  after 
the  incident  has  been  forgotten.  Improved  account- 
ing methods,  which  utilize  perpetual  inventories  and 
controlling  accounts,  make  it  possible  to  keep  in  daily 
touch  with  the  financial  condition  of  the  business,  in- 
stead of  waiting  for  a  monthly  or  yearly  stock-taking. 
Robert  Owen,  at  the  beginning  of  the  last  century, 
was  accustomed  when  away  to  receive  daily  reports 
from  the  mills  at  New  Lanark;  present-day  execu- 


290      FACTORY  AND  OFFICE  ADMINISTRATION 

tives  who  are  not  in  daily  touch  with  conditions  are 
more  than  one  hundred  years  behind  the  times. 

6.  Determining  facts  by  inspection. — Another 
method  of  determining  the  facts  of  a  business  is  irf- 
spection.  One  may  be  well  assured  that  in  these  days 
of  keen  competition  and  close  scrutiny  of  expense  of 
all  kinds,  the  outlay  for  inspection  must  be  considered 
a  good  investment,  or  it  would  not  be  tolerated  by  so 
many  important  companies. 

The  inspection  methods  of  the  Westinghouse  Elec- 
tric and  Manufacturing  Company1  are  typical  of 
large  engineering  concerns.  The  inspection  depart- 
ment, which  is  under  the  supervision  of  the  manager 
of  works,  consists  of  several  hundred  men  and  this 
force  is  divided  into  two  sections;  one  for  the  inspec- 
tion of  apparatus  building  in  its  own  works,  the  other 
for  the  inspection  of  all  materials  coming  from  out- 
side manufacturers — including  the  various  raw  and 
partly  finished  materials — and  of  apparatus  of  its  own 
manufacture  returned  for  any  reason,  such  as  for 
repair  or  exchange,  or  sent  back  from  loans  or  ex- 
hibits, etc.  Materials  coming  from  outside  manu- 
facturers are  generally  inspected  upon  arrival  at  the 
works,  tho  certain  kinds  of  a  special  nature,  such  as 
bar  pulleys,  etc.,  are  often  given  a  preliminary  inspec- 
tion or  test  at  the  place  of  manufacture. 

In  addition,  representatives  of  the  company  are 
sometimes  delegated  to  inspect  the  works  of  manuf  ac- 

i"The  Work  of  Shop  Inspection,"  C.  B.  Anel,  American  Machinist, 
May  25,  1911,  p.  977. 


STATISTICS  AND  INSPECTION  291 

turers  with  whom  there  seems  a  likelihood  of  doing 
business,  to  see  if  their  facilities  are  such  as  to  enable 
them  to  furnish  materials  of  the  degree  of  excellence 
required. 

The  material  specifications  prepared  by  the  Ma- 
terial Committee  are  made  use  of  by  the  inspection 
department  in  seeing  that  the  materials  supplied  are 
actually  what  was  ordered. 

A  very  complete  chemical  and  testing  laboratory 
is  maintained  by  the  company,  and  full  advantage  is 
taken  of  it  not  only  in  the  preliminary  testing  of  raw 
materials  but  also  in  the  examination  of  partly  fin- 
ished material  or  apparatus  at  various  stages  during 
the  process  of  manufacture. 

Careful  records  are  kept  of  materials  rejected  or 
found  defective  in  any  respect,  and  steps  are  taken  to 
see  that  they  are  promptly  disposed  of,  to  prevent  any 
possibility  of  their  becoming  mixed  with  accepted  ma- 
terials. 

7.  Inspection  of  work  in  process. — In  the  inspec- 
tions of  the  company's  apparatus  endeavor  is  con- 
stantly made  in  each  department  to  have  the  work  in- 
spected during  the  actual  making  as  well  as  upon 
completion. 

As  there  are  85,000  different  items  listed  in  the 
stock  room  it  would  be  impossible  to  inspect  every  in- 
dividual piece.  When  automatic  and  semi-automatic 
machinery  is  used,  after  it  is  properly  set  and  working 
it  is  necessary  to  inspect  only  a  small  percentage  of  the 
output  with  a  view  to  preventing  the  dies  from  wear- 


292     FACTORY  AND  OFFICE  ADMINISTRATION 

ing  out  or  getting  out  of  alignment.  On  the  other 
hand,  apparatus  which  is  made  by  hand  with  special 
limit  gauges,  templets,  etc.,  requires  frequent  detailed 
inspection  of  all  its  parts,  and  this  the  company  aims 
to  give. 

Next  to  inspecting  the  work  while  it  is  still  in  the 
workman's  hands,  the  best  method  is  to  have  the  ma- 
terial after  each  operation  delivered,  with  an  identifi- 
cation tag,  to  an  inspector  and  approved  before  going 
to  the  next  operator. 

Some  concerns  hold  each  man  responsible  for  de- 
fects in  the  piece  on  which  he  works,  thus  causing 
him  to  examine  carefully  all  the  work  he  receives,  for 
errors  of  the  preceding  workers. 

8.  Questions  as  guides. — It  is  of  great  assistance 
to  the  inspectors,  especially  the  new  men  who  are 
being  trained,  to  be  supplied  with  some  list  of  ques- 
tions such  as  the  following,  which  call  their  attention 
to  special  points  to  be  noted.  The  questions  are  so 
framed  that  they  may  be  answered  by  yes  or  no ;  thus 
the  amount  of  writing  required  is  minimized. 

COMPLETE  MACHINE  INSPECTION  TAG 

OF  THE 
WESTINGHOTJSE  ELECTRIC  AND  MANUFACTURING  COMPANY 

Has  frame  been  cleaned  and  painted  inside? 

Are  field  coils  tight,  and  is  bore  of  field  correct? 

Are  holes  evenly  spaced  ? 

Do  interpole  bolts  extend  beyond  shot  face  ? 

Are   connections   between  field   coils   properly   cleaned   and 
insulated  ?   . 


STATISTICS  AND  INSPECTION  293 

Has  flame-proof  braid  been  removed  from  brush-holder  ends 

and  replaced  by  tape  ? 

Are  housings  entirely  free  from  dust  and  core  sand? 

Do  bearings  and  housings  fit,  and  is  alignment  correct?.  .  .  . 

Are  oil  grooves  chipped  in  cells  ? 

Is  drain  hole  provided  for  waste  oil? 

Are  brush-holders  properly  spaced  and  brush  tension  cor- 
rect?     

Are  brushes  parallel  with  commutator  segments  ? 

Are  oil  covers  properly  fitted? 

Is  pinion  tight  on  shaft  and  key  properly  fitted? 

Does  gear-case  clear  gear? 

Did  commutator  develop  high-bar  on  test  ? 

Serial    

Order    

Inspected   by 

9.  Qualifications  of  inspectors. — Inspectors  should 
be  chosen  from  among  experienced  workmen  and,  if 
possible,  from  the  department  where  they  will  serve 
as  inspectors.  They  should  be  men  imbued  with  a 
sense  of  the  responsibility  of  the  position  and  with 
good  judgment  not  only  in  passing  on  materials  but 
in  dealing  with  men. 

Judgment  is  essential  in  inspection  because  while 
some  variations  from  drawings  in  no  way  affect  the 
utility  of  the  machine,  others  may  cause  serious  re- 
sults. All  defects  and  variations  are  given  careful 
consideration  in  order  that  it  may  be  determined 
whether  the  piece  should  be  scrapped  outright, 
whether  the  imperfection  may  still  be  rectified  or,  if 


294     FACTORY  AND  OFFICE  ADMINISTRATION 

the  fault  be  an  unimportant  one,  whether  the  machine 
or  apparatus  may  be  passed  as  it  stands.  Of  course, 
a  full  knowledge  of  the  situation  is  required  before  an 
intelligent  decision  can  be  arrived  at.  If  the  inspec- 
tor is  undecided  he  refers  the  matter  at  once  to  the 
department  head,  stopping  all  work  thereon,  pending 
a  decision. 

10.  Information  from  the  outside. — The  efficiency 
of  inspection  depends  in  very  large  degree  upon  the 
aid  received  from  the  engineering,  correspondence, 
testing  and  other  departments.     Every  letter  of  com- 
plaint is  accepted  at  its  face  value  and  conditions  are 
thoroly  investigated :  first,  with  a  view  to  ascertaining 
the  cause  of  the  trouble;  second,  with  a  view  to  pre- 
venting a  recurrence  of  it.     It  will  be  found  decidedly 
efficacious  when  complaints  are  received  involving  de- 
fective workmanship,  now  and  then  to  send  the  fore- 
man or  inspector  of  the  department  at  fault  to  see  for 
himself  the  cause  of  the  trouble.     In  this  way,  his 
viewpoint  will  be  broadened  and  he  will  appreciate 
more  fully  than  he  would  otherwise  the  necessity  of 
good  work. 

No  matter  how  adequate  the  organizations  may  be, 
there  will  be  certain  points,  particularly  with  new  ap- 
paratus, or  new  applications  of  standard  apparatus, 
that  can  be  gleaned  only  from  actual  experience. 
Hence,  the  efficiency  of  the  works  must  depend  to  a 
large  extent  upon  the  suggestions  of  their  erecting 
gangs  and  customers. 

11.  Various  kinds  of  inspection. — Inspection  as  a 


STATISTICS  AND  INSPECTION  295 

means  of  gaining  information  is  not  confined  to  me- 
chanical lines.  Traveling  auditors  perform  similar 
duties  in  a  different  field.  Spasmodic  inspection, 
however,  unless  backed  by  proper  reports,  is  liable  to 
result  in  erroneous  impressions.  Conditions  are  likely 
to  be  unusual  and  the  men  nervous.  In  fact,  compa- 
nies often  waste  considerable  money  in  this  kind  of 
investigation.  When  it  is  rumored  that  an  inspection 
is  to  take  place,  men  are  taken  off  their  regular  work 
and  set  to  cleaning  up,  since  so  many  officials  under 
such  circumstances  confuse  appearance  with  efficiency. 
This  loss  of  time  may  be  prevented  in  part  by  having 
the  inspection  take  place  unannounced ;  but  better  by 
the  percentage  system,  which  provides  that  a  certain 
percentage  of  the  work  be  examined  or  an  established 
number  of  inspections  be  made,  the  particular  lot  or 
time  of  inspection,  of  course,  being  unknown.  If  the 
work  inspected  proves  satisfactory  the  entire  amount 
is  passed.  If  any  defects  are  found  the  entire  lot  is 
carefully  examined  for  further  errors. 

REVIEW 

Why  are  business  men  inclined  to  dislike  statistics? 

What  important  information  can  be  conveyed  to  an  executive 
thru  the  medium  of  the  graph? 

Inspection  plays  an  important  part  in  every  business.  Explain 
the  basic  reason  for  this  fact. 

How  can  inspection  be  improved  thru  the  cooperation  of  the 
laborers  ? 

If  the  selection  of  an  inspector  were  among  your  duties,  what 
qualifications  would  you  keep  in  mind  whereby  you  could  test  the 
applicants? 


CHAPTER  XXII 

SAVINGS  IN  TIME:  RESEARCH  AND  RECORDS 

1.  Inspection  and  research. — Closely  allied  with  in- 
spection, so  closely  allied,  in  fact,  that  one  set  of  appa- 
ratus often  serves  the  two  functions,  is  research.  The 
two  functions  are,  however,  distinct.  Inspection  is 
for  the  purpose  of  insuring  that  the  work  of  material 
shall  come  up  to  certain  prescribed  standards.  Re- 
search is  for  the  purpose  of  determining  these  stand- 
ards and  for  discovering  possible  improvements  in  the 
product  or  the  manufacturing  processes.  Research 
is  much  like  advertising;  its  value  is  cumulative.  The 
first  results  are  likely  to  be  disappointing,  and  if  the 
work  is  discontinued  they  are  absolutely  worthless. 
When  the  general  plan  of  recording  all  results  is  fol- 
lowed, however,  apparently  useless  results  often  prove 
of  great  assistance  in  the  solution  of  future  problems. 
The  General  Electric  Company  spends  annually  two 
and  a  half  million  dollars  in  making  and  developing 
inventions.  In  addition  to  its  experts  it  employs  a 
corps  of  twelve  patent-attorneys  and  twenty-eight 
assistants.  The  Westinghouse  Electric  Company 
maintains  a  department  almost  as  large  and  expensive. 
The  Pennsylvania  Railroad  Testing  Laboratories  at 
the  company's  Altoona  shops  were  established  in  1875, 
and  employ  over  200  men.  The  American  Telephone 

296 


SAVINGS  IN  TIME  297 

and  Telegraph  Company,  the  Hoe  Printing  Press 
Company,  and  scores  of  smaller  concerns  carry  a 
force  of  salaried  men  whose  duty  it  is  to  make  inven- 
tions and  to  develop  their  possibilities. 

2.  A  large  research  laboratory. — Probably  one  of 
the  largest  and  best  equipped  commercial  laboratories 
is  that  of  the  J.  I.  Case  Threshing  Machine  Company, 
which  makes  every  kind  of  machine  used  in  threshing 
grain.  It  has  its  own  facilities,  but  to  offset  the  heavy 
expense  of  maintaining  the  laboratory,  it  does  com- 
mercial work  for  other  firms. 

The  laboratory  occupies  four  rooms  in  the  com- 
pany's office  building.  One  is  the  laboratory  office, 
in  which  the  reports  are  made  up  and  the  results  of 
the  various  analyses  and  tests  are  recorded  for  use, 
reference  and  distribution.  The  office  contains  a 
library  of  several  hundred  volumes  on  subjects  relat- 
ing to  chemistry,  physics,  electricity,  heat,  power, 
manufacturing,  etc.  The  fine  microscopes,  barome- 
ters, hygrometers,  anemometers,  machines  for  elec- 
trolysis, grease-testing  machines,  glue  testers,  etc., 
are  also  kept  here.  Among  them  are  a  number  of 
very  delicate  scales,  one  sensitive  to  the  1200th  part 
of  a  milligram. 

Samples  of  all  kinds  of  minerals,  paints,  oils,  drugs, 
paper,  cloth,  leather,  rubber,  cordage,  fuels,  clays, 
brick,  etc.,  are  kept  here  for  reference,  inspection  and 
comparison.  The  collection  of  samples  forms  a  basis 
of  a  valuable  education  not  only  for  the  chemists  but 
for  the  shop  foremen.  i 


298     FACTORY  AND  OFFICE  ADMINISTRATION 

The  system  of  record-keeping  is  careful  and  ac- 
curate, and  data  for  years  back  are  a  very  valuable  fea- 
ture. One  set  of  books  is  used  for  research  work, 
one  for  recording  chemical  analyses,  one  for  physical 
tests,  and  one  exclusively  for  foundry  work. 

3.  Commercial  results. — The  head  jof  the  labora- 
tory not  only  is  an  expert  chemist,  but  he  has  had  many 
years  of  practical  experience  in  the  iron  and  steel,  rub- 
ber, leather,  oil,  paint  and  other  industries.  Being 
thoroly  practical,  he  is  able  to  judge  of  the  value  of 
any  particular  chemical  analysis  or  physical  test. 
This  practical  knowledge,  of  course,  is  essential  in  a 
laboratory  of  this  kind,  for  while  any  chemist  may  be 
able  to  make  an  analysis,  yet  in  applying  chemistry  to 
practical  work  he  may  be  entirely  at  a  loss,  and  thru 
lack  of  personal  experience  in  the  manufacturing  or 
commercial  side  of  the  problem  he  may  often  do  more 
harm  than  good.  Each  of  the  assistant  chemists 
handles  a  special  line  of  work,  so  that  the  laboratory 
runs  in  a  systematic  manner.  A  very  important  fea- 
ture of  its  work  is  the  making  of  specifications  for  the 
raw  materials  which  the  company  uses.  This  involves 
a  great  amount  of  testing  and  research  work. 

Another  feature  is  the  investigation  of  the  causes 
of  failures  and  breakages  and  the  solution  of  the  diffi- 
culties. This  is  also  an  important  part  of  the  work 
of  the  Pennsylvania  Railroad  and  of  the  Westing- 
house  testing  laboratories,  and  their  procedure  is  al- 
most identical  with  that  of  the  J.  I.  Case  Company. 
Thus,  if  a  threshing  machine  shaft,  bearing  or  belt 


SAVINGS  IN  TIME  299 

proves  defective  or  breaks  for  an  unknown  cause  it  is 
shipped  to  the  laboratory  and  carefully  tested  and  ex- 
amined. If  the  fault  is  due  to  poor  workmanship  or 
defective  materials,  the  chemist  reports  the  fact  and 
the  part  is  replaced  free  of  charge.  If  the  examina- 
tion fails  to  show  the  cause,  the  foreman  or  chemist  is 
dispatched  to  the  locality  where  the  trouble  occurred 
to  make  a  thoro  investigation.  If  an  inordinate  strain 
has  been  applied  or  unusual  conditions  introduced,  the 
investigator  is  in  a  position  to  suggest  the  necessary 
changes.  Altho  this  method  is  expensive,  the  com- 
pany feels  fully  repaid  in  that  such  a  plan  insures  the 
confidence  of  its  customers  and  tends  to  improve  fu- 
ture output. 

4.  Time-study. — One  phase  of  research  work  which 
has  awakened  a  great  deal  of  interest,  and  to  which 
reference  has  been  made  in  preceding  sections,  is  time- 
study;  that  is,  the  scientific  determination  of  the 
amount  of  time  it  should  take  a  man  to  do  a  given  piece 
of  work.  Frederick  W.  Taylor,  who  has  been  closely 
associated  with  time-study  methods,  describes  this 
work  as  follows : l 

It  has  been  the  writer's  experience  that  the  difficulties  of 
scientific  time-study  are  underestimated  at  first,  and  greatly 
overestimated  after  actually  trying  the  work  for  two  or  three 
months.  The  average  manager  who  decides  to  undertake  the 
study  of  "unit  times"  in  his  work,  fails  at  first  to  realize  that 
he  is  starting  a  new  art  or  trade.  He  understands,  for  in- 
stance, the  difficulties  which  he  would  meet  in  establishing  a 

i  Transactions,  American  Society  of  Mechanical  Engineers,  Vol.  XXIV, 
p.  1423. 


300     FACTORY  AND  OFFICE  ADMINISTRATION 

drafting  room,  and  would  look  for  but  small  results  at  first 
if  we  were  to  give  a  bright  man  the  task  of  making  drawings 
who  had  never  worked  in  a  drafting  room,  and  who  was  not 
even  familiar  with  drafting  implements  and  methods,  but  he 
entirely  underestimates  the  difficulties  of  this  new  trade. 

The  art  of  studying  "unit  times"  is  quite  as  important 
and  as  difficult  as  that  of  the  draftsman.  It  should  be  under- 
taken seriously  and  looked  upon  as  a  profession.  It  has  its 
•own  peculiar  implements  and  methods,  without  the  use  and 
understanding  of  which  progress  will  necessarily  be  slow,  and 
in  the  absence  of  which  there  will  be  more  failures  than  suc- 
cesses scored  at  first. 

In  the  course  of  this  work  Mr.  Thompson  has  developed 
what  are  in  many  respects  the  best  implements  in  use,  and 
with  his  permission  some  of  them  will  be  described.  The 
blank  form  or  note-sheet  used  by  Mr.  Thompson,  shown  in 
Fig.  14,  contains  essentially: 

1.  Space  for  the  description  of  the  work  and  notes  in 
regard  to  it. 

2.  A  place  for  recording  the  total  time  of  complete 
operations — that  is,  the  gross  time  including  all  neces- 
sary delays  for  doing  a  whole  job  or  large  portion  of  it. 

3.  Lines  for  setting  down  the  "detail  operations"  or 
"units"  into  which  any  piece  of  work  may  be  divided, 
followed  by  columns  for  entering  the  averages  obtained 
from  the  observations. 

4f.  Squares  for  recording  the  readings  of  the  stop- 
watch when  observing  the  times  of  these  elements.  (If 
the  squares  are  filled,  additional  records  can  be  entered 
on  the  back.) 

The  size  of  the  sheets,  which  should  be  of  best  quality 
ledger  paper,  is  8%  inches  wide  by  7  inches  long,  and  by 
folding  in  the  center  they  can  be  conveniently  carried  in  the 
pocket  or  placed  in  a  case  containing  one  or  more  stop- 
watches. 

In  the  illustration  the  operation  consists  of  a  series  of  ele- 
ments. In  such  a  case,  the  letters  designating  each  elemen- 
tary unit  are  entered  under  the  columns  "Op,"  the  stop-watch 


SAVINGS  IN  TIME  301 

is  thrown  to  zero,  and  started  as  the  man  commences  to  work. 
As  each  new  division  of  the  operation  (that  is,  as  each  ele- 
mentary unit  or  "unit  time")  is  begun,  the  time  is  recorded. 
During  any  special  delay  the  watch  may  be  stopped,  and 
started  again  from  the  same  point,  altho  as  a  rule  Mr. 
Thompson  advocates  allowing  the  watch  to  run  continuously, 
and  enters  the  time  of  such  stop,  designating  it  for  con- 
venience by  the  letter  "Y." 

5.  Time-study  reduced  to  formula. — The  elemen- 
tary operations  are  usually  fewer  in  number  than  the 
complex  processes  of  which  they  form  a  part.  This 
greatly  simplifies  the  problem.  When  the  standard 
elementary  times  have  been  determined  and  tabulated, 
the  standard  time  for  any  new  work  can  be  determined 
without  making  a  special  study,  by  combining  the 
proper  known  elementary  times.  In  fact,  formulas 
can  be  deduced,  exactly  like  other  engineering  formu- 
las, in  which  the  varying  quantities,  such  as  the  dis- 
tance traveled  or  the  weight  moved,  may  be  substi- 
tuted, and  which,  when  solved,  give  the  standard  time 
that  the  job  should  take. 

Any  variation  of  this  standard  time  from  the  actual 
time  taken  in  doing  the  job  represents  avoidable  loss. 
To  eliminate  the  waste  it  is  often  necessary  to  change 
the  workman's  methods  of  doing  the  work  or  to  re- 
design the  machinery  so  as  to  facilitate  operation. 

Where  the  operations  run  into  the  thousands  the 
best  results  are  obtained  by  grouping  them  into  classes 
according  to  the  similarity  of  design,  shape  and  me- 
chanical operation  of  the  machines,  and  then  making 
an  accurate  study  of  each  group.  While  it  is  prob- 

IV — 21 


302     FACTORY  AND  OFFICE  ADMINISTRATION 


ably  true  that  the  deductions  made  from  these  tests 
will  not  be  as  thoro  as  those  obtained  by  individual 


If  I 


11 


>    s 


tests,  a  systematic  examination  of  such  classes  gives 
quicker  and  better  results  than  could  be  gained  by  a 
haphazard  examination  of  the  whole  field. 


SAVINGS  IN  TIME  303 

6.  Written  aids,  books,  etc. — Books  on  topics  con- 
nected with  management  are  of  value  as  a  basis  for 
obtaining  an  education  in  fundamental  principles  or 
for  convenient  reference.     The  English  philosopher, 
Dr.  Samuel  Johnson,  has  said  that  one-half  of  a  man's 
education  consists  of  knowing  where  to  get  informa- 
tion.    To  keep  abreast  of  the  progress  in  one's  own 
field  it  is  also  necessary  to  supplement  the  information 
in  books  with  periodical  literature. 

7.  Periodicals. — Among  the  most  valuable  sources 
of  printed  information  today  are  the  trade  papers  and 
the   proceedings  of  the  various   technical   societies. 
These  supplement  each  other.     The  latter  are  some- 
what more  general,  in  that  the  proceedings  enumerate 
the  theories,  the  discoveries,  or  the  results  of  experi- 
ments conducted  by  the  members. 

In  the  same  class  with  the  proceedings  of  the  techni- 
cal societies  must  be  placed  the  publications  offered 
by  the  general  and  state  governments.  While  the 
various  departments  of  agriculture  are  doing  the 
best  work,  much  valuable  information  concerning 
business  is  contained  in  the  publications  issued  by  the 
bureaus  of  commerce  and  labor.  A  small  charge  is 
made  for  some  of  them,  but  the  majority  are  issued 
free.  Illinois  has  established  an  Engineering  Ex- 
periment Station  in  connection  with  its  school  of  engi- 
neering, and  has  investigated  such  important  topics  as 
fuels,  building  material  and  railroad  equipment ;  it  has 
published  its  findings  for  the  benefit  of  Illinois  manu- 
facturers. 


304     FACTORY  AND  OFFICE  ADMINISTRATION 

8.  Government  publications. — The  Superintendent 
of  Documents,  Washington,  D.   C.,  publishes  two 
monthly  catalogs  listing  all  publications  of  the  Fed- 
eral government. 

In  addition  to  making  use  of  the  library  facilities 
of  the  community,  many  companies  find  it  advisable 
to  maintain  special  libraries  of  their  own,  either  sepa- 
rately or  in  connection  with  their  testing  laboratories. 
These  libraries  also  collect  special  material,  which  can- 
not be  secured  thru  the  regular  channels  and  which  in- 
cludes the  literature  of  their  competitors,  forms, 
formulas  and  the  like. 

9.  Study  of  competitive  methods. — Another  source 
of  information  is  data  obtained  from  competitors. 
When  the  Pennsylvania  Railroad  considered  the  ques- 
tion of  pensions,  a  special  committee  on  Superannu- 
ation and  the  Pension  Fund  was  appointed  by  the 
advisory  committee  of  the  relief  department.     The 
committee  examined  and  reported  upon  the  various 
systems  of  pensioning  in  operation  on  more  than  sev- 
enty of  the  leading  railroads  of  Europe,  America, 
Asia,    Africa    and   Australia.     When   the   Weston 
Electrical  Instrument  Company  resolved  to  build  its 
new  plant  at  Newark,  N.  J.,  it  sent  three  practising 
engineers  on  a  year's  tour  of  American  plants,  two  of 
the  engineers  to  study  mechanical  features  and  one  to 
discover  what  arrangements  other  companies  were 
making  for  their  employes'  comfort. 

Mr.  C.  B.  Anel,  Assistant  Manager  of  Works, 
Westinghouse  Electric  and  Manufacturing  Company, 


SAVINGS  IN  TIME  305 

in  a  recent  speech  before  the  National  Machine  Tool 
Builders'  Association,  said: 

Recognizing  that  methods  of  manufacture  which  had  in  the 
past  been  satisfactory  for  their  needs  were  proving  inade- 
quate to  handle  the  increasing  volume  of  business,  for  the 
reasons  already  stated,  the  Westinghouse  Electric  and  Man- 
ufacturing Company  spent  considerable  time  in  investigating 
the  methods  of  other  large  companies  in  similar  lines  of  busi- 
ness, with  the  result  that  it  was  believed  advisable  to  modify 
the  original  scheme  in  favor  of  the  so-called  "factory  system." 

In  a  recent  article  in  the  American  Machinist  ap- 
peared this  significant  paragraph: 

The  firm  stands  ready  to  furnish  information  concerning 
its  experience  in  this  line  which  may  be  useful  for  others  who 
are  thinking  of  establishing  laboratories  for  themselves. 

10.  American  readiness  to  supply  information. — 
The  liberality  with  which  American  companies  are 
willing  to  share  their  experiences  has  often  excited 
the  surprise  of  European  visitors,  since  abroad  the 
methods  of  doing  business  are  zealously  guarded  from 
all  outsiders.  In  fact,  so  general  is  the  "get-together" 
idea  in  American  industry  that  a  firm's  willingness  to 
give  information  is  a  fair  indication  of  the  value  of 
the  information  that  it  has  to  give.  Small  concerns 
are  often  opposed  to  giving  away  "trade  secrets," 
whereas  the  large  corporations  are  glad  to  show  vis- 
itors thru  their  works  and  to  furnish  any  information 
within  reason.  Conversely,  many  of  them  make  a 
practice  of  sending  their  foremen  and  department 
heads  to  visit  other  factories. 

One  method  which  has  proved  effective  in  writing 


306     FACTORY  AND  OFFICE  ADMINISTRATION 

to  a  competitor  for  information  is  to  state,  "This  is  the 
way  we  are  now  handling  the  matter;  if  you  have  a 
better  method  we  should  like  to  hear  of  it."  Another 
method  when  an  extended  investigation  is  planned,  is 
to  state  the  fact  and  offer  to  give  other  companies 
copies  of  the  results,  provided  they  will  cooperate  by 
describing  their  methods.  A  recent  inquiry  of  this 
kind  addressed  to  fifty  firms  concerning  their  method 
of  applying  the  "suggestion"  system  brought  thirty- 
five  replies. 

9.  Consulting  experts. — Specialists  exist  in  almost 
every  line  of  business.  There  are  consulting  engi- 
neers, certified  public  accountants,  testing  chemists 
and  patent-lawyers.  In  the  steel  business  there  are 
agencies  which  will  inspect  the  work  in  the  mills,  while 
there  are  advertising  and  sales  experts  and  informa- 
tion bureaus  without  number.  This  specialty  work 
is  now  being  systematized  by  many  agencies,  so  that 
the  business  man  may  secure  information  more  readily 
than  he  ever  could  before. 

REVIEW 

How  is  the  manager  of  a  factory  aided  by  its  research  de- 
partment ? 

Why  should  the  manager  of  a  testing  or  research  bureau  have 
a  strong  appreciation  of  commercial  values? 

The  last  few  years  have  seen  much  attention  given  to  time- 
studies.  How  could  you  show  that  investigation  along  these  lines 
belongs  to  the  research  department?  Could  you  show  also  what 
the  relation  of  time-study  is  to  inspection  ? 

Discuss  the  value  of  books,  trade  papers,  etc.,  as  aids  in  the 
saving  of  the  manager's  time  and  control  of  a  factory  or  office. 

Why  should  a  company  be  willing  to  aid  its  competitors  in 
every  way  possible  in  the  matter  of  laboratory  or  research  work  ? 


CHAPTER  XXIII 

SAVINGS  IN  TIME— ROUTING 

1.  Time-saving  by  "routing." — London  and  Paris 
first  learned  of  the  death  of  Pope  Leo  XIII  from 
New  York,  altho  New  York  is  3,000  miles  farther 
from  Rome  than  either  of  those  two  cities.  This  was 
because  the  Associated  Press  had  routed  the  news. 

As  a  courtesy  to  the  Church,  in  order  that  Cardinal 
Rampolla  might  have  time  to  notify  the  papal  dele- 
gates, the  Italian  Minister  of  Telegraphs  refused  to 
allow  any  news  of  the  Pope's  death  to  pass  until  two 
hours  had  elapsed.  When  the  Pope  died,  an  attache 
immediately  telephoned  the  Associated  Press  repre- 
sentative two  miles  away,  who  in  turn  cabled  to  the 
New  York  manager  personally,  .as  had  been  previ- 
ously agreed,  "The  number  of  the  missing  bond  is  404 
Montefiore."  To  avoid  any  suspicion,  the  number 
which  gave  the  time  of  the  Pope's  death  was  to  be 
written  backward,  as  352  for  253,  or  53  minutes  past 
2.  It  happened  that  this  made  no  difference.  When 
the  telegram  arrived  in  the  New  York  office  its  con- 
tents were  shouted  to  the  sending  room  and  each  oper- 
ator flashed  the  news  over  his  circuit.  Altho  the  mes- 
sage was  relayed  at  Havre  and  again  at  the  French 
Cable  Company's  office  in  New  York,  the  New  York 

307 


308     FACTORY  AND  OFFICE  ADMINISTRATION 

papers  knew  of  the  Pope's  death  nine  minutes  after  it 
had  happened,  and  the  San  Francisco  papers,  eleven 
minutes.  The  foreign  newspaper  agents  in  New 
York  sent  the  news  to  their  respective  cities  long  be- 
fore these  cities  had  heard  directly  from  Rome. 

In  the  Associated  Press  methods  we  find  an  admir- 
able illustration  of  efficiency  gained  thru  careful  plan- 
ning and  routing. 

The  routing  of  news  seems  easy,  perhaps,  because 
of  the  nature  of  the  substance  routed.  The  routing 
of  materials  over  a  line  of  railway  is  the  next  best 
illustration.  Since  the  elements  here  involved  per- 
tain to  industrial  routing  as  well  as  to  transportation 
it  is  well  to  study  them  carefully. 

2.  Essentials  in  routing. — Railroad  dispatching  has 
three  factors: 

1.  A  route  carefully  laid  out. 

2.  A  prearranged  time  schedule  of  all  trains,  based 
on  the  experience  of  the  road. 

3.  A  train  dispatcher,  whose  duty  it  is  to  keep  the 
trains  moving  according  to  schedule  and,  if  this  is  not 
possible,  at  least  to  move  them  to  the  best  possible 
advantage. 

The  proper  routing  of  work  thru  shop  or  office  is 
characterized  by  the  same  three  features : 

1.  A  prearranged  route. 

2.  A  predetermined  time  schedule. 

3.  A  dispatcher. 

A  near  approach  to  the  railroad  schedule  in  the  com- 


ROUTING  309 

mercial  world  is  the  delivery-routing  system  of  a  big 
retail  store. 

3.  Securing  a  good  plant  layout. — The  physical 
routing  of  the  work  in  a  business  is  determined  mainly 
by  the  plant  layout,  in  exactly  the  same  way  that  the 
railway  train  route  is  determined  by  the  track,  and  the 
same  care  should  be  given  to  laying  out  the  plant  that 
is  given  to  a  railroad  survey. 

Mechanical  helps  are  of  great  assistance  in  arriving 
at  the  best  solution  of  the  factory  problem  just  as  the 
chart  is  of  great  assistance  to  the  railroad  man  in 
connection  with  his  time-table.  It  is  well  to  cut  tem- 
plets to  the  scale  of  the  machines,  including  their  nec- 
essary clearances  and  working  spaces,  and  then  to 
shift  these  until  the  best  departmental  arrangement  is 
found.  A  symmetrical  arrangement  means  always 
the  most  economical  use  of  space.  Then  cut  templets 
of  each  department  and  fit  them  into  one  another  in 
the  same  way  as  in  determining  the  complete  layout. 
It  is  much  easier  to  shift  paper  than  to  carry  the  idea 
in  one's  head  or  to  work  up  a  sketch  with  pencil  and 
rubber.  Another  method  is  to  prepare  several  dis- 
tinct layouts  on  tracing  paper  and  then,  by  superim- 
posing them,  make  a  final  sketch  including  the  best 
features  of  each.  This  method  is  followed  by  most 
architects.  When  the  ultimate  solution  is  determined 
by  the  site,  as  in  a  city  lot  or  in  rented  quarters,  this 
method  works  well ;  but  where  perfect  freedom  is  pos- 
sible it  is  not  likely  to  give  so  good  a  layout  as  the 


310     FACTORY  AND  OFFICE  ADMINISTRATION 

first  method,  since  it  works  from  the  wrong  end.  The 
ultimate  solution  of  the  layout  problem  of  any  busi- 
ness will  be  determined  by  the  interplay  of  the  same 
four  factors,  work  to  be  done,  straight-line  movement, 
gravity  and  cost.  But  while  this  is  true  in  general, 
differences  in  application  of  the  principles  arise  as 
soon  as  they  are  applied  to  industrial  conditions. 

4s.  Straight  line  between  terminals. — All  manufac- 
turing touches  the  outside  world  at  two  points — the 
receiving  and  shipping  departments.  These  are  the 
terminals  of  the  road;  and  the  simplest  and  best  lay- 
out, other  things  being  equal,  is  a  straight  line  between 
these  two  points.  Where  the  plant  has  only  one  con- 
nection, as  one  street  or  one  railroad  siding,  the  routes 
must  generally  constitute  a  circle,  so  that  the  start 
and  the  finish  will  be  at  the  same  point,  or  a  U  or 
series  of  U's,  both  ends  of  which  touch  the  outside 
world.  When,  however,  other  exits  are  possible,  re- 
ceiving and  shipping  need  not  unduly  influence  the 
routing,  but  may  be  located  so  as  to  facilitate  manu- 
facture. As  soon,  however,  as  these  elementary  con- 
ditions of  the  location  of  the  "industrial  terminals'* 
are  passed,  there  appear  more  important  complica- 
tions which  affect  the  routing. 

5.  Various  types  of  manufacture. — All  manufac- 
turing is  analytic,  continuous,  assembling,  or  more 
often  a  combination  of  all  three  processes.  Thus  the 
work  of  the  United  States  Steel  plant  at  Gary  is  ana- 
lytic, in  that  it  breaks  the  coal  up  into  coke,  gas  and 
tar,  each  of  which  must  then  be  handled  separately. 


ROUTING  311 

The  next  operation  is  to  unite  the  coke,  ore  and  lime- 
stone, which  must  be  received  separately  and  united 
in  the  blast  furnaces.  It  is  then  analytic  again,  in 
that  it  separates  the  iron  from  the  slag,  which  is  sub- 
sequently manufactured  into  cement ;  and  finally  it  is 
continuous,  in  that  the  iron  continues  without  further 
additions  until  it  emerges  as  bars. 

6.  Analytic  manufacture. — The  analytic  type  of 
manufacture  is  one  in  which  the  main  material  is 
gradually  dissected  to  form  many  products,  one  of 
which  is,  however,  usually  of  predominating  impor- 
tance.    The  best  illustration  is  the  meat  industry, 
where  the  carcass  is  broken  up  into  beef,  hides,  bones, 
etc.,   each  of  which  is   treated   separately   after   it 
leaves  the  main  stream.     The  important  point  in  such 
industries  is  to  provide  means  of  taking  away  the 
parts  that  are  removed,  so  they  will  not  collect  and 
block  the  main  stream  of  work. 

7.  Continuous  manufacture. — In  the   continuous 
manufactures  the  mass  remains  the  same  thruout  the 
process,  being  merely  acted  upon  and  changed  in 
form.     This  is  by  far  the  simplest  kind  and  might  be 
compared  to  a  canal  where  the  entire  bulk  of  the  water 
enters  at  one  end  and  leaves  at  the  other.     In  weav- 
ing, the  thread  enters  at  one  end  of  the  loom,  and 
after  the  application  of  labor  alone,  emerges  as  cloth 
at  the  other.     In  milling,  the  wheat  enters  at  one  end 
and  the  flour  emerges  at  the  other. 

8.  Assembling  manufacture. — By  means  of  the 
assembling  process  many  different  materials  are  re- 


312     FACTORY  AND  OFFICE  ADMINISTRATION 

ceived,  worked  upon  and  gradually  brought  together 
to  make  the  finished  whole.  Building  is  the  best  illus- 
tration because  it  is  exclusively  an  assembling  oper- 
ation. It  assembles  the  bricks,  cement,  plumbing  and 
other  manufactured  products  into  a  house.  The  im- 
portant thing  in  assembling  is  to  see  that  the  neces- 
sary parts  come  together  at  the  right  time  and  place, 
for  all  subsequent  movement  must  wait  until  all  the 
parts  arrive. 

9.  Passageways  must  be  provided. — Whatever  the 
type  of  manufacture,  sufficient  room  must  be  allowed 
to  provide  convenient  access  to  all  parts  of  a  machine, 
and  to  allow  for  the  removal  of  any  machine  whenever 
necessary.     Sufficient  area  must  exist  for  the  storing 
of  as  large  a  supply  of  working  material  and  finished 
material  as  may  be  necessary,  without  interfering  with 
the  passageways.     Storage  facilities  must  be  provided 
at  each  point  where  the  flow  of  work  is  likely  to  be 
interrupted   and  wherever  two   streams  unite.     In 
order  to  minimize  this   area,  the  most  economical 
method  of  stocking  should  be  determined  and  the 
space  should  be  allotted  accordingly. 

10.  Transportation. — Adequate  transportation  fa- 
cilities must  be  provided. 

The  open  areas  must  be  wide  enough  to  permit  the  passage 
of  two  trucks  in  the  aisles  and  for  the  sidetracking  of  trucks 
around  machines.  A  truck  system  involving  the  retention  of 
the  material  in  the  trucks,  with  as  little  unloading  as  possi- 
ble, is  an  important  feature  and  one  deserving  attention  in 
an  establishment.  It  involves  the  building  of  a  considerable 
number  of  trucks,  and  departmental  supervision,  but  is  likely 


ROUTING  313 

to  result  in  economy.  In  some  instances  trucks  are  desirable, 
built  so  as  to  pick  up  and  deliver  a  sheet-steel  keg  for  hold- 
ing work  in  progress.  An  ample  supply  of  metal  "tote 
boxes"  for  holding  small  parts  will  facilitate  stock-moving 
and  lessen  losses  of  small  parts.1 

Derricks,  traveling  cranes  and  industrial  railroads 
are  a  great  convenience  in  the  handling  of  heavy  ma- 
terials and  are  often  a  necessity.  Belt,  link,  gravity 
and  pipe  lines  are  serviceable  where  the  material  is 
uniform  or  will  flow.  Where  the  plant  consists  of 
several  buildings  it  is  customary  to  connect  them  by  a 
system  of  tunnels  radiating  from  the  power  house. 
These  tunnels  have  cement  floors,  and  brick  and  ce- 
ment walls,  waterproofed  with  asphalt.  They  are 
large  enough  to  accommodate  the  trucks  used  and  to 
allow  a  man  to  stand  upright.  They  usually  carry 
the  electric  and  water  pipes  but  no  drainage. 

All  service  departments,  such  as  stock  rooms,  draft- 
ing rooms,  tool  rooms,  and  wash  and  locker  rooms, 
should  be  centrally  located  so  as  to  be  equally  access- 
ible from  all  the  departments  which  they  serve. 

Certain  departments  are  by  their  nature  mutually 
exclusive. 

Obviously  it  would  be  inconsistent  to  have  a  saw  mill  in  the 
same  room,  or  enclosure,  with  departments  for  shellacking 
and  final  finishing  of  wood  surfaces,  as  good  work  of  this 
character  cannot  be  performed  where  the  surrounding  air  is 
carrying  even  a  small  amount  of  dirt  or  grit.2 

Some  work,  on  the  other  hand,  is  better  done  in  con- 
junction with  other  work  of  the  same  kind.  Stiff  hats 

1  Hugo  Diemer,  "Factory  Administration,"  p.  15. 

2  Day,  "Industrial  Plants,"  p.  51. 


314     FACTORY  AND  OFFICE  ADMINISTRATION 

are  dried  four  distinct  times  during  their  manufacture 
and  it  would  be  uneconomical  to  equip  four  separate 
drying  rooms  in  order  to  prevent  retracing  one's  steps. 

11.  Growth  must  be  allowed  for. — Railroads  are 
now  accustomed  to  look  into  the  future  and  build 
their  bridge  piers  and  terminals  to  accommodate  the 
expected  increase  of  traffic.     The  first  requirement 
for  systematic  expansion  is  land.     One  of  the  main 
reasons  why  big  businesses  are  moving  from  the  cities 
to  the  suburbs  is  that  they  must  provide  for  future 
growth.     It  is  essential,  however,  that  a  growing  con- 
cern 

shall  not  burden  itself  at  the  beginning  to  provide  for  future 
prospects.  One  of  the  surest  plans  a  concern  can  follow  to 
prevent  it  from  ever  requiring  expansion  room  is  to  incur  too 
heavy  an  expense  in  securing  a  location  that  will  permit  fu- 
ture growth.1 

12.  Expansion  not  to  interfere  with  flow  of  work. — 
The  buildings  should  be  designed  to  permit  expan- 
sion without  disturbing  the  flow  of  the  work.     The 
simplest  style  is  the  one-story  building  taking  its  light 
from  the  roof.     This  can  expand  indefinitely  in  all 
four  directions.     In  all  multiple-story  buildings,  side- 
lighting  must  be  provided  for  and  so  growth  is  made 
possible  only  by  extending  the  ends  or  by  erecting 
separate  additional  buildings,  much  as  a  filing  cabinet 
is  built  up  by  adding  units.     This  is  possible  only  in 
schools  or  textile  mills  where  the  work  is  uniform 
and  can  be  shifted  from  building  to  building  without 

i  Duncan,  "Principles  of  Industrial  Management,"  p.  34. 


ROUTING 


315 


loss.  Where  the  movement  is  in  a  straight  line  from 
the  receiving  room  to  the  shipping  room  the  lateral 
growth  will  add  capacity  without  changing  the 
method.  An  example  of  this  system  is  the  plan  of 
the  United  States  Steel  Corporation's  plant  at  Gary. 


Ship  Canal 

To  be  filled  in  to  Provide  Land 
for  Lateral  Expansion 

Present  S'lore  Line 

Receiving  and  Storage 

V 

Blast  Furnace 

Soaking  Pits 

v 

Rail  and  Plate  Mills 

Shipping  by  Rail 

FIGURE  15.^— GENERAL  LAYOUT  OF  U.  S.  STEEL  PLANT  AT  GARY. 

The  same  idea  in  multiple-story  buildings  is  shown 
in  the  plant  of  the  Wagner  Electric  Manufacturing 
Company  of  St.  Louis  and  the  Allis-Chalmers  Corn- 


Receiving  and 

storeroom 


Machinery 
etc. 


Machin- 
ery 
etc. 


Assembling 


Future 
Bldgs. 


FIGURE  16. — LAYOUT  OF  A  PLANT  WITH  MULTIPLE-STORY  BUILDINGS. 


316     FACTORY  AND  OFFICE  ADMINISTRATION 

pany.  The  idea  underlying  all  such  building  is  to 
have  the  work  which  may  need  the  most  room  in  the 
future,  touch  the  growing  end. 


• 

i 

Dept.  3 

Dept.  2 



Dept.  4 

Dept.  1 

FIGURE  17. — CORRECT  LAYOUT  OF  DEPARTMENTS. 

By  arranging  the  departments  as  in  Figure  18,  the 
management  would  exclude  growth  in  department  2 
or3. 


Dept.  1 

Dept.  2 

Dept.  3 

Dept.  4 

FIGURE  18. — INCORRECT  LAYOUT  OF  DEPARTMENTS. 

13.  Taking  advantage  of  gravity. — The  force  of 
gravity  being  universal,  it  influences  manufacturing 
no  less  than  railroading.  Every  time  a  load  is  brought 
down  stairs  and  taken  back  again,  energy  is  wasted. 
There  are  two  ways  to  avoid  this  waste.  The  mate- 
rials may  be  taken  directly  to  the  top  floor  and  al- 
lowed to  work  back  systematically  to  the  first  thru 


ROUTING  317 

the  manufacturing  processes,  or  they  may  be  started 
on  the  ground  floor  and  systematically  worked  up  to 
the  top.  The  finished  product  may  then  be  brought 
down.  The  first  way  is  usually  the  better  as  the 
energy  stored  in  moving  the  materials  to  the  top  may 
be  economically  used  to  transport  them  thru  the  man- 
ufacturing processes  back  to  the  shipping  room  on  the 
ground  floor. 

Gravity  should  be  recognized  in  small  individual 
operations  as  well  as  in  a  great  mass.  In  the  best  or- 
ganized shops  machine  tenders  are  no  longer  allowed 
to  drop  their  product  on  the  floor.  They  take  it  from 
a  movable  table  at  machine  height  and  pass  it  thru 
the  machine  to  another  movable  table  so  that  when 
the  work  is  finished  the  materials  can  be  rolled  to  the 
next  operator,  with  a  saving  of  lifting  and  carrying. 
The  trucks  should  have  large  wheels  and  large  beam- 
ings. Lifting  goods  to  a  car  or  truck  is  unnecessary ; 
the  shipping  room  should  be  level  with  the  floor  of 
the  car  or  truck. 

14.  Time  element  in  routing. — Routing,  however, 
involves  not  only  materials  and  locations  but  time  as 
well.  Much  routing  in  a  high  stage  of  development 
has  gone  unrecognized  because  business  time  sched- 
ules are  not  often  recognized  as  such,  being  expressed 
as  quantity  of  output.  The  time  schedule  of  the  Car- 
negie Steel  Company,  for  instance,  had  a  constantly 
increasing  number  of  tons  of  steel  per  week,  and 
every  superintendent  who  fell  below  this  mark  was 
expected  to  explain.  When  analyzed,  "5,000  tons 

IV— 22 


318     FACTORY  AND  OFFICE  ADMINISTRATION 

per  week"  simply  means  that  5,000  tons  must  be  com- 
pleted in  7  X  24  or  168  hours;  in  other  words,  that 
the  production  of  a  ton  must  never  take  more  than 
16%ooo,  or  .0336  hours. 

15.  Two  types  of  routing. — From  the  time  sched- 
ule standpoint  there  are  only  two  classes  of  manu- 
facture : 

1.  For  stock;  that  is,  the  factory  turns  out  the  same 
thing  continuously,  throwing  on  the  sales  department 
the  responsibility  of  finding  a  market  for  the  product. 
This  class  includes  textiles,  typewriters,  shoes,  furni- 
ture, clothing,  pianos  and  most  of  the  ordinary  goods 
which   are   consumed   in    quantity.     Quantity   time 
schedules  are  adequate  for  manufacture  for  stock. 

2.  For  specific  contract;  that  is,  a  single  object  is 
made  to  a  customer's  order.     This  class  includes  re- 
pair work  on  orders  from  the  general  shops,  but  its 
most  important  feature  is  the  assemblage  of  large 
engineering  products  such  as  locomotives,  large  ma- 
chinery, steamboats  and  buildings.     Making  connec- 
tions is  the  important  thing  in  manufacturing,  as  it 
is  in  railroading,  for  one  late  part  will  stall  the  entire 
work.     A  premature  arrival  is  as  bad  as  a  delay.     If 
the  steel  for  a  modern  skyscraper  arrives  before  the 
foundations  are  complete,  chaos  ensues,  for  it  is  con- 
stantly in  the  way,  retarding  the  work  which  must  be 
done  before  the  steel  can  be  set.     It  may  take  a  month 
or  more  to  straighten  out  the  confusion.     It  is  there- 
fore necessary  to  figure  out  the  time  necessary  to 
manufacture  each  separate  part,  and  to  schedule  the 


ROUTING  319 

starting  date  of  each  succeeding  operation  accord- 
ingly. These  time  schedules  resemble  ordinary  rail- 
road time-tables. 

For  example,  in  the  Thompson-Starrett  schedule 
for  the  construction  of  a  New  York  office  building, 
shown  in  Figure  19,  on  page  322,  it  will  be  noticed 
that  the  foundations  start  11-1  (November  1),  the 
day  the  excavation  is  finished,  and  not  sooner,  and  that 
the  steel  erection  starts  11-24  (November  24) ,  the  day 
the  foundations  are  finished.  The  supplying  of  the 
granite,  however,  depends  not  only  upon  the  com- 
pletion of  the  steel  construction,  but  upon  the  finish- 
ing of  the  foundation  walls,  and  so  the  granite  starts 
as  soon  as  they  are  brought  to  grade,  12-8  (Decem- 
ber 8) .  The  limestone  follows  the  granite  12-10  (De- 
cember 10)  and  the  brick  succeeds  the  limestone  12-15 
(December  15).  The  floor  arches,  however,  depend 
again  on  the  steel  and  follow  right  behind  the  rivets 
before  the  steel  work  is  complete,  and  so  thruout  the 
building.  The  difference  of  a  day  or  two  between 
operations  is  to  allow  the  time  necessary  to  get  the 
material  on  the  job  so  as  to  be  able  to  start  at  once. ' 

REVIEW 

Compare  the  essential  features  in  the  preparation  of  a  train 
schedule  with  those  in  the  establishment  of  a  routing  schedule  in 
a  factory  or  an  office. 

What  mechanical  aids  may  be  used  in  working  out  the  best 
routing  schedule  for  a  factory? 

Classify  the  following  manufactures  according  to  the  types 
mentioned  in  this  chapter:  the  manufacture  of  slices,  of  gas,  of 
ships,  of  wall-paper,  of  flour,  of  steel,  of  automobiles,  the  build- 
ing of  a  house. 


320      FACTORY  AND  OFFICE  ADMINISTRATION 

A  carriage  manufacturer  located  a  department  for  sawing  in 
the  same  room  with  one  for  the  shellacking  of  wood  surfaces. 
What  principle  of  organization  did  this  plan  violate? 

An  engineering  concern  bought  a  building  in  the  heart  of  New 
York.  The  company  grew  rapidly.  What  difficulties  were  likely 
to  arise  in  regard  to  location? 

What  manufacturing  elements  or  classes  should  be  kept  in  mind 
when  the  subject  of  time-schedule  in  routing  the  material  is  up 
for  determination? 


CHAPTER  XXIV 

SAVINGS  IN  TIME-DISPATCHING—AUXILIARY 
APPLIANCES 

1.  When  special  dispatching  is  necessary. — As  in 
railroading,  so  in  manufacturing  the  time  schedule  is 
the  important  thing,  and  the  more  spectacular  method 
of  special  dispatching  is  resorted  to  only  when  unfore- 
seen circumstances  occur.     Therefore,  personal  dis- 
patching is  of  comparatively  little  importance  in  man- 
ufacturing   for    stock,    especially    where    automatic 
machinery  is  used  which  sets  the  pace  for  the  oper- 
ator.    It  is,  on  the  other  hand,  an  important  adjunct 
to  manufacturing  for  specific  orders,  because  the  gen- 
eral and  repair  work,  on  account  of  its  irregular  na- 
ture, cannot  be  mapped  out  in  advance  and  because 
the  elaborate  schedule  of  a  building  or  other  work 
may  be  entirely  invalidated  by  the  carelessness  of  one 
worker.     Like  the  train  dispatcher  the  industrial  dis- 
patcher must  know  his  shop,  its  exact  condition,  its 
capacity,  special  characteristics,  of  men  and  machines 
and  the  amount  of  work  and  materials  he  has  on  hand. 

2.  How  to  plan  the  routing. — But  the  dispatcher, 
or  the  order-of-work  clerk,  is  not  supposed  to  work 
out  his  schedules  alone.     The  planning  department 
provides  him  with  all  the  necessary  information  as 

321 


TIME  SCHEDULE 
Class  Office-Loft 


THOMPSON-STARRETT  COMPANY 

BUILDING  123  WILLIAM  STREET 


No.  2*6        Date  Dec.1, 1909. 


OFF 

CE8CHEOUL 

E 

JOB  SC 

HEDUUE 

n 

MUST    BC   LCT 

Ft* 

WORK 

START 

F,N,SH 

ARCHITECT'S  DRAWINGS 

WRECKING 

EXCAVATION 

10-10 

11-1 

DRAINS  AND  WATER 

10-10 

10-20 

CAISSONS-FILES 

FOUNDATIONS  -CONCRETE 

11-1 

11-25 

WALLS  TO  GRADE 

11-25 

12-8 

WATERPROOF 

11-CS 

2-10 

10    GRILLAGE-COLUMN  BASES 

11-10 

11-20 

9-10 

9-20 

11    STEEL  ERECTION-  STACK 

11-21 

1-1 

10-10 

10-15 

12    ORNAMENTAL  IRON-STAIRS-PLAIN 

12-5 

1-10 

13               ••                    ••        FINISH 

2-3 

3-10 

10-10 

10-20 

11    ELEVATORS-GUIDES-TEMP.-CAR 

12-20 

1-25 

15              "                 CAR-SIGNAL-TEST 

2-20 

3-20 

10-10 

10-15 

16    BOILERS 

12-5 

1-5 

11-1 

11-15 

1?    PUMP-TANKS 

1-8 

1-20 

10-20 

10-28 

18    ARCHES 

12-8 

1-10 

10-20 

10-25 

19    PLUMBING-GAS-ROUGH-TEST 

12-3 

1-20 

20             "              FINISH-FIXTURES 

2-10 

3-15 

10-20 

10-25 

21    HEAT-VENTILATION-ROUGH 

12-3 

1-20 

22       "          REGULATION-FINISH 

2-10 

3-15 

HnSr- 

11-25 

21         •«             FIXTURES-MOTORS 

2-10 

3-15 

10-25 

11-2 

25    COMMON   BRICK  WALLS 

12-16 

1-20 

9-25 

IV-o 

26    GRANITE 

12-6 

12-10 

10-1 

10-15 

27    BLUESTONES- 

12-6 

12-10 

10-1 

10-15 

28    LIMESTONE-MARBLE 

12-10 

12-16 

9-25 

10-1 

29    TERRA  COTTA 

12-20 

1-20 

10* 

10-25 

30    FACE   BRICK-  ENAMELED 

12-15 

1-12 

10-5 

10-25 

31    SPECIAL   BRICK-MOLD-  FIRE-HOLLOW 

12-15 

1-12 

10-25 

11-5 

32    WOOD  FRAMES-SASH 

12-16 

1-20 

10-25 

11-2 

33    METAL  FRAMES-SASH 

12-16 

1-20 

10-25 

11-2 

34    PULLEYS-WEIGHTS-CHAINS 

12-16 

1-20 

11-15 

11-25 

35    GLASS 

1-7 

1-20 

11-10 

11-20 

36    HOOF  COVER 

1-8 

1-25 

11-10 

11-20 

37    SHEET  METAL 

1-8 

1-25 

11-10 

11-20 

38    BUCKS 

12-26 

1-25 

11-15 

11-25 

39    STRIPS  AND  FILL 

12-28 

2-1 

11-22 

11-28 

10    PARTITIONS  AND  FURRING 

1-1 

2-5 

12-5 

12-15 

11    GROUNDS  AND  LATH 

1-10 

2-12 

11-20 

12-1 

42    PLASTER-  PLAIN 

1-19 

3-1 

43          <•             ORNAMENTAL 

2-1 

3-1 

11-5 

11-15 

44    MARBLE  WALLS-TILE 

2-1 

3-1 

45           "           FLOORS-TILE,   MOSAIC,  TERRAZZO 

2-10 

3-10 

11-5 

11-15 

46    HARDWARE-FINISH 

1-28 

2-18 

11-15 

11-25 

47    TRIM-WOOD 

2-10 

3-20 

18         "       CALCIMINE 

2-10 

3-20 

11-25 

12-5 

19    PAINT-DECORATION 

2-20 

3-20 

12-1 

12-15 

50    FINISH  FLOOR-WOOD-CEMENT 

2-20 

3-20 

51    MAIL  CHUTE 

12-20 

2-28 

52    REVOLVING  DOOR 

1-10 

1-15 

53    PAVING-SIDEWALK-CURB 

2-16 

3-8 

51    VAULT  WORK 

55    FILTER 

56    SPRINKLER-PNEUMATIC-SWEEPING 

57    ICE  PLANT 

58    LAUNDRY-KITCHEN 

59    ENGINES-GENERATORS 

GO 

61 

52 

53 

61     FINISH  BUILDING-  SCHEDULE  TIME 

3-20 

65          ••               "              CONTRACT  TIME 

4-1 

FIGURE  19. 
322 


SAVINGS  IN  TIME  DISPATCH  323 

to  what  work  is  to  be  routed  and  how  it  is  to  be  routed. 
The  order-of-work  clerk  dispatches  his  jobs  in  ac- 
cordance with  these  instructions.  He  must  keep  in 
mind  a  multitude  of  details  regarding  the  machines, 
the  men  and  all  the  jobs  which  have  been  routed  for 
him,  for  it  is  his  duty  to  keep  the  work  moving.  Ac- 
cordingly, he  is  supplied  with  a  dispatch  or  "route" 
board,  the  instrumental  means  by  which  the  planning 
room  controls  the  operating  departments. 

3.  What  the  route-board  is. — The  route-board, 
which  contains  many  groups  of  hooks — each  group 
being  composed  of  three  sets,  placed  one  above  the 
other — shows  the  progress  of  all  work  and  the  move- 
ment of  all  material  from  point  to  point.  When  a 
job  is  assigned  to  a  machine,  the  operation  card  is 
hung  on  the  lowest  one  of  a  series  of  three  hooks,  each 
machine  or  working  area  in  the  shop  being  represented 
on  the  bulletin  board  by  one  of  these  sets  of  hooks. 
Thus  the  assignment  of  a  job  to  a  machine  shows  that 
all  drawings,  instruction  cards,  etc.,  are  ready;  that 
the  materials  are  on  hand  and  everything  prepared 
for  the  machine  to  begin  its  work.  It  is  then  that 
the  "operation  order"  which  covers  a  given  operation 
goes  on  hook  No.  3,  the  lowest  hook  and  the  one  which 
represents  all  "jobs  ahead  in  the  shop"  for  that  ma- 
chine. Next,  when  the  materials  have  been  moved  to 
the  machine,  the  operation  order  is  put  on  hook  No.  2, 
"jobs  ahead  at  machine."  Finally,  when  the  job  is 
actually  begun  the  operation  order  is  moved  to  the  top 
hook,  No.  1,  "job  on  machine." 


324      FACTORY  AND  OFFICE  ADMINISTRATION 

The  order-of-work  clerk,  or  for  that  matter  any 
person  interested,  can  follow  the  movement  of  a  job 
thru  the  shop  by  watching  the  operation  orders  on 
these  three  hooks.  If  the  job  should  be  moved  to  an- 
other machine,  then  the  operation  order  would  be  as- 
signed to  another  group  of  three  hooks,  corresponding 
to  the  second  machine. 

4.  Planning -board  signals  all  movements. — Thus 
the  planning-board  signals  the  movements  and  in- 
dicates the  sequence  in  which  the  jobs  are  done.     This 
it  does  for  the  planning  room ;  but  the  man  in  the  shop 
must  also  be  informed  of  these  movements,  for  his 
activities  depend  on  them.     He  must  know  whether 
he  is  to  work  at  the  same  machine  or  at  a  different  one 
after  one  job  is  completed.     He  cannot  run  to  the 
planning  room  every  time.     Hence  a  miniature  bulle- 
tin board  is  placed  in  the  shop ;  and  when  an  order  in 
the  planning  room  goes  to  hook  No.  2,  "jobs  ahead  at 
machine,"  a  duplicate  order  goes  upon  the  shop  bulle- 
tin board  notifying  the  worker  what  jobs  have  been 
planned  ahead  for  him. 

5.  Questions  answered  by  route-board. — By  means 
of  this  route-board,  a  whole  series  of  questions  vital  to 
the  management  can  be  answered  immediately:   (1) 
what  job  shall  be  done  first;  (2)  if  a  machine  breaks 
down  what  other  machine  can  do  the  work;  (3)  if  a 
man  .is  absent  what  other  man  can  do  the  job;  (4) 
what  is  the  cost  of  any  operation  on  any  machine  for 
any  hour,  or  what  is  the  total  cost  of  all  operations 
going  on  at  all  machines  in  any  hour. 


SAVINGS  IN  TIME  DISPATCH 


325 


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FIGURE  20. — THIS  Is  A  PORTION  OF  AN  ORDER  SHOWING  How  THE  RECORDS 
WERE  ACTUALLY  KEPT.  THE  FIGURES  IN  ITALICS  REPRESENT  CON- 
DEMNATIONS. THEY  ARE  USUALLY  ENTERED  IN  RED  INK.I 

i  Reprinted  by  permission  from  H.  L.  Gantt's  "A  Graphical  Daily  Bal- 
ance in  Manufacture,"  in  Transactions,  American  Society  of  Mechanical 
Engineers,  Vol.  XXIV,  p.  1324. 


326     FACTORY  AND  OFFICE  ADMINISTRATION 

6.  Status  of  work  in  progress. — In  all  quantity 
manufacture — fpr  example,  for  stock  where  the  con- 
tract work  is  divisible  into  working  units,  such  as 
certain  railroad  work  where  an  embankment  can 
be  divided  into  cubic  yards — a  regular  proportion 
must  be  completed  in  each  unit  of  time  if  the  entire 
contract  is  to  be  finished  punctually.  If  the  shop  is 
unable  to  produce  its  quota  at  the  start,  it  will  surely 
be  unable  to  make  up  the  shortage  in  addition  to  the 
regular  allotment  at  the  end.  It  is,  however,  in  the 
assembling  industries  that  the  progress  of  work  must 
be  most  carefully  watched.  On  the  first  indication 
that  any  one  part  is  falling  behind,  it  should  be 
brought  up  to  date  either  by  employing  men  overtime 
or  by  increasing  the  force.  Comparative  figures  are 
always  more  intelligible  and  therefore  it  is  better,  if 
possible,  to  combine  the  progress  report  and  the  time 
schedule,  which  show,  at  all  times,  the  state  of  the  job 
in  relation  to  the  schedule. 

The  American  Locomotive  Company's  progress  re- 
port is  shown  in  Figure  20.  The  upper  and  lower 
heavy  black  lines  indicate  the  time  schedule  and  cor- 
respond with  the  start  and  finish  dates  on  the  Thomp- 
son-Starrett  schedule.  They  are  printed  in  red  on  the 
original  form  and  are  known  as  the  danger  lines.  A 
black  line  is  ruled  under  each  department  when  all  the 
work  is  finished  to  indicate  this  fact  to  the  chaser. 
Figure  21  shows  the  same  form  as  used  in  the  machine 
shops.  The  starting  and  stopping  lines  have  been 
omitted  to  avoid  confusion.  It  will  be  noticed  that 


SAVINGS  IN  TIME  DISPATCH 


327 


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FIGURE  21. — RECORDS  AS  USUALLY  KEPT.I 

i  Reprinted  by  permission  from  H.  L.  Gantt's  "A  Graphical  Daily  Bal- 
ance in  Manufacture,"  in  Transactions,  American  Society  of  Mechanical 
Engineers,  Vol.  XXIV,  p.  1324. 


328      FACTORY  AND  OFFICE  ADMINISTRATION 

the  different  operations  follow  one  another  in  regular 
sequence.  If  any  department  holds  up  the  work  the 
fact  is  shown,  for  in  such  an  event  the  figures  do  not 
follow  those  of  the  preceding  department. 

The  information  with  which  to  keep  such  a  report 
up  to  date  may  be  obtained  from  the  shop  by  means  of 
the  coupon  form  of  order  (Figure  22).  This  order, 
which  follows,  and  which  is  usually  wired  fast  to  the 
piece,  with  a  coupon  for  each  department,  resembles 
a  railroad  ticket.  When  the  work  in  any  one  depart- 
ment is  completed  a  coupon  is  detached  and  returned 
to  the  dispatcher,  who  enters  the  fact  on  his  report. 
In  this  way  it  is  possible  to  know  by  noon  of  any  day 
the  exact  state  of  all  work  in  progress  up  to  quitting 
time  of  the  day  before,  and  so  it  is  possible  to  push 
work  which  is  falling  behind.  But  in  shops  where  the 
planning  department  is  fully  developed,  the  state  of 
work  is  indicated  on  a  "progress-of-work  sheet"  by  the 
record  clerk  when  the  job  is  given  out  and  when  the 
ticket  is  returned  by  the  worker.  In  outside  work 
and  work  done  by  contractors  it  is  customary  to  get 
the  information  by  personal  inspection.  Thus  one  of 
the  most  important  duties  of  Thompson- Starrett's 
"chasing  department"  calls  for  regular  visits  to  the 
subcontractors  and  exact  reports  as  to  how  their  work 
stands  with  reference  to  the  time  schedule. 

7.  How  to  route  office  work. — The  New  York 
Clearing  House  illustrates  the  value  of  routing  in 
office  work.  Each  bank  has  a  numbered  desk  and  is 
represented  by  a  delivery  clerk  and  a  settling  clerk. 


1 
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330      FACTORY  AND  OFFICE  ADMINISTRATION 

The  settling  clerk  remains  at  the  bank's  desk  and 
receives,  records  and  receipts  the  checks  returned 
by  the  other  banks.  The  delivery  clerk  takes  his 
place  in  front  of  his  bank's  desk,  and  on  the  man- 
ager's signal  moves  to  the  desk  on  his  left,  delivers 
the  packages  of  checks,  drafts,  etc.,  drawn  on  that 
bank  and  deposited  in  his  own  bank,  and  after  re- 
ceiving a  receipt  for  the  package  moves  forward  to  the 
next  desk,  and  so  around  the  room.  By  this  method 
the  banks  are  enabled  to  exchange  over  $300,000,000 
in  about  ten  minutes. 

8.  Time  schedule  of  the  clearing  house. — The  dis- 
patcher is  the  manager  of  the  clearing  house.  He 
directs  the  operations  from  his  raised  balcony  at  the 
end  of  the  room.  The  following  schedule  indicates 
the  promptness  with  which  business  is  done : 

9 :59  Clerks  must  be  in  their  places.  Failure  will 
be  punished  by  fine. 

10:00  Delivery  starts. 

10:45  Time  up  for  making  proof.  Fines  will  be 
imposed  for  all  mistakes  remaining  unlo- 
cated. 

11 :15  Fines  will  be  doubled  for  all  mistakes  remain- 
ing unlocated. 

12 :00  Fines  will  be  quadrupled  for  all  mistakes  re- 
maining unlocated. 

1 :30  Time  up  for  settling  debit  balances.  A  fine 
will  be  imposed  on  all  debtor  banks  that 
have  failed  to  settle  their  accounts  with 
the  clearing  house. 


SAVINGS  IN  TIME  DISPATCH  331 

1 :30  Credit  balances  will  be  paid  by  the  clearing 
house,  but  no  credit  balances  will  be  paid 
until  all  the  debit  banks  have  settled. 

The  efficiency  of  this  schedule  is  proved  by  the  fact 
that  altho  the  annual  clearings  have  sometimes  ex- 
ceeded $100,000,000,000,  the  greatest  annual  total  of 
all  the  fines  imposed  was  $1,422  (1889)  and  it  has 
fallen  as  low  as  $280  a  year  (1904). 

9.  How  organization  saves  time. — The  purpose  of 
organization  is  to  enable  each  employe  to  work  under 
the  best  possible  conditions  of  team-play.     The  man- 
agement should  remove  all  obstacles  to  the  workman's 
best  performance  and  supply  all  the  aids  necessary. 
Delays  not  only  waste  the  workman's  time  but  shut 
down  his  machine.     It  is  well  to  remember  that  an 
employe  is  not  working  for  himself,  and  any  assistance 
which  an  employer  can  give  him  enables  him  to  do  the 
concern's  business  more  intelligently. 

The  workman  needs  certain  aids  in  doing  his  work. 
These  include  power,  machinery,  tools,  materials  and 
the  cooperation  of  his  fellow-employes  and  the  man- 
agement. The  need  for  supplying  machines  and 
power  is  so  obvious  that  it  hardly  calls  for  mention. 
What  needs  emphasis  is  that  the  workman  must  be 
continuously  supplied  with  power  and  equipment ;  in 
other  words,  that  he  must  be  protected  from  delays 
due  to  breakdowns,  etc. 

10.  Substitute  power  equipment. — The  commonest 
method  of  guarding  against  power  shortage  is  to  pro- 


332      FACTORY  AND  OFFICE  ADMINISTRATION 

vide  substitute  power  equipment.  Many  of  the  New 
England  mills  operated  by  water-power  find  it  neces- 
sary to  have  steam  plants  to  help  out  during  periods 
of  drouth.  Similarly,  many  concerns  in  New  York 
City  using  electric  power  find  it  advisable  to  continue 
their  old  steam  equipment,  even  tho  the  Edison  Com- 
pany offers  to  buy  it  up. 

Substitution  is  a  valuable  preventive  in  all  lines, 
even  tho  the  substitute  is  sometimes  more  expensive 
than  the  thing  it  replaces.  The  difference  in  cost  will 
be  more  than  offset  by  the  saving  of  time,  the  most 
expensive  factor  in  business. 

11.  Equipment  tickler. — An  ounce  of  prevention  is 
worth  a  pound  of  cure.     The  most  efficient  mainte- 
nance is  the  replacing  of  a  part  before  it  actually 
breaks.     A  tickler  system  is  a  valuable  aid.     The  best 
type  of  tickler  is  one  which  has  a  portfolio  for  each 
day  in  the  year,  large  enough  to  hold  all  reminders. 
Notices  should  be  placed  in  the  tickler  in  advance  to 
come  out  at  proper  intervals  thruout  the  year  for  the 
examination  and  repairing  of  parts  of  machines,  boil- 
ers, engines,  belts,  etc.,  likely  to  wear  out  or  otherwise 
give  trouble. 

12.  Other  methods  to  avoid  shutdowns. — Another 
method  of  maintenance  is  the  annual  shutdown  of  the 
plant  as  practised  by  the  National  Cash  Register  Com- 
pany, the  Remington  Typewriter  Company  and  other 
large  concerns.    All  the  operators  are  given  their  va- 
cations at  the  same  time,  the  plant  shuts  down  and 
the  entire  equipment  is  overhauled.     In  the  steel  in- 


SAVINGS  IN  TIME  DISPATCH  333 

dustry  it  has  been  found  advisable  to  relieve  the  fur- 
naces each  Sunday,  whether  they  need  it  or  not,  so  as 
to  prevent  their  burning  out  during  the  week.  In 
the  same  way  ships  find  it  advisable  to  overhaul  all 
machinery  while  in  port  and  to  replace  worn  parts, 
even  tho  they  might  last  another  trip,  rather  than  take 
chances  on  breaks  in  mid-ocean. 

No  matter  how  carefully  things  are  watched,  occa- 
sional breakdowns  are  bound  to  occur,  and  the  best 
way  to  minimize  the  loss  is  to  be  prepared  for  them. 
The  stock  room  should  always  carry  a  supply  of  repair 
parts,  and  the  plant  should  have  adequate  wrecking 
equipment,  such  as  traveling  cranes  and  hoists  for 
taking  out  and  replacing  the  broken  machinery. 

REVIEW 

In  dispatching  work  thru  the  factory  or  office  what  information 
is  of  paramount  importance  to  the  man  who  plans  the  schedule? 

Study  your  own  department  and  develop  a  "route-board"  by 
means  of  which  you  could  control  the  movement  of  material  from 
point  to  point. 

What  questions  are  answered  (or  should  be)  by  the  route- 
board? 

Design  a  production-sheet  for  some  product  with  which  you 
are  familiar. 

How  do  some  concerns  avoid  the  losses  due  to  shutdowns,  va- 
cations, power  shortage,  etc.? 

IV — 23 


CHAPTER  XXV 

SAVINGS  IN  MATERIAL— STOCKKEEPING 

1.  Stockkeeping  system  a  necessity. — In  order  to 
guarantee  sufficient  and  proper  tools  and  materials,  it 
is  essential  to  have  a  modern  stockkeeping  system. 
The  duty  of  a  stock  or  tool  department,  as  described 
by  Harrington  Emerson,  is  to  supply  the  right  mate- 
rial, at  the  right  place,  at  the  right  time,  of  the  required 
quality,  in  the  minimum  necessary  quantity  and  at  the 
lowest  cost.     In  addition  to  preserving  the  materials 
from  deterioration,  loss  and  waste,  the  stockkeeper 
must  anticipate  the  shop's  needs  so  as  to  prevent  any 
loss  of  time  from  waiting  for  supplies.    The  supplies 
are  furnished  to  the  workman  at  his  machine  or  desk, 
which  he  is  not  allowed  to  leave.    His  duty  is  to  run 
that  machine,  for  when  he  is  away  getting  supplies  or 
gossiping  with  other  workmen  at  the  storeroom  win- 
dow, his  work  is  being  neglected. 

2.  Tool  room  in  charge  of  expert. — The  tool  room 
should  be  in  charge  of  a  tool  expert  who  has  the  care 
of  all  tools  and  of  sharpening  and  keeping  them  in 
shape.    No  workman  is  allowed  to  stop  and  sharpen 
his  own  tools.    He  must  call  for  new  ones ;  he  is  sup- 
plied with  a  call  bell  so  that  he  does  not  have  to  go 
after  the  tools  but  has  them  brought  to  him.     The 

334 


SAVINGS  IN  MATERIAL  335 

workman  quickly  realizes  the  justice  of  this  plan,  and 
when  he  knows  that  his  bonus  depends  on  his  efficiency, 
it  is  interesting  to  see  how  he  makes  the  helpers  step 
around.  Some  companies  even  go  so  far  as  to  supply 
each  man  with  a  standard  kit  of  hand  tools  which  he 
must  use  constantly,  and  a  locker  in  which  to  keep 
them,  instead  of  letting  him  furnish  his  own.  For 
these  he  gives  his  receipt,  promising  to  return  them  or 
their  value  on  leaving  the  company's  employ.  The 
advantages  of  this  method  are : 

1.  It  reduces  the  number  of  tools  required. 

2.  It  enables  the  shop  to  obtain  exact  standards. 

3.  It  assists  the  shop  in  dictating  the  exact  method 
of  doing  the  work. 

3.  Three  rules  of  storekeeping. — The  interest  on 
the  capital  released  by  a  maximum  and  minimum 
stores  system  will  often  pay  the  entire  expense  of  the 
department.  The  stores  materials  are  commonly 
subdivided  into  tools,  rough  stores  or  raw  materials, 
and  finished  stores  ready  for  shipment.  Often  they 
are  still  further  divided  into  finished  parts  awaiting 
assemblage,  or  possibly  further  divisions,  as  occasion 
demands.  However,  the  principles  of  handling  these 
classes  are  the  same  and  are  very  simple. 

There  are  only  three  operations  in  storekeeping: 
the  receipt  of  goods,  the  issuance  of  goods  to  workmen 
and  the  preservation  of  the  remainder  on  hand. 
There  are  only  three  rules  of  stockkeeping : 

1.  A  receipt  is  to  be  given  for  all  goods  received. 

2.  A  receipt  is  to  be  taken  for  all  goods  delivered. 


336      FACTORY  AND  OFFICE  ADMINISTRATION 

3.  Someone  must  be  responsible  for  stores  on  hand, 
just  as  a  cashier  is  held  responsible  for  all  cash. 

4.  Receiving  supplies. — Goods  are  received  from 
only  three  sources.     The  first,  and  by  far  the  largest 
portion,  is  purchased  from  outsiders.     Before  being 
placed  in  stock  these  goods  must  be  carefully  checked 
as  to  quantity  and  quality,  for  after  they  are  placed 
in  stock  their  identity  is  lost.     In  order  that  the  re- 
ceiving clerk  may  do  this  intelligently  he  must  be 
supplied  with  a  duplicate  copy  of  the  purchase  order. 
Where  he  does  not  have  such  a  copy  he  is  sure  to 
accept  shortages  and  wrong  goods.     The  discrepancy 
may  be  subsequently  caught  by  the  accounting  de- 
partment, in  checking  receipts  with  the  original  or- 
ders, but  after  the  goods  have  been  received  and 
placed  in  stock  it  is  much  more  difficult  to  rectify  mis- 
takes and,  consequently,  it  is  less  likely  that  any  at- 
tempt will  be  made  to  do  so.     It  is  customary,  how- 
ever, to  omit  the  price,  which  does  not  concern  the 
storekeeper. 

Some  suspicious  purchasing  agents  blank  the  quan- 
tity, thus  making  sure  that  the  receiving  clerk  actually 
checks  the  quantity  received.  In  all  cases  it  is  neces- 
sary to  give  the  unit  of  measure ;  %"  nickel-plated  ells 
are  purchased  by  the  piece,  W  galvanized  ells  by  the 
pound.  Unless  the  order  states  which  unit  is  em- 
ployed the  check  may  be  entirely  useless,  and  no  sec- 
ond checking  is  possible.  Where  goods  are  purchased 
or  issued  according  to  weight  the  stock  clerk  should  be 
supplied  with  a  scale.  This  seems  obvious,  yet  such 


SAVINGS  IN  MATERIAL  337 

simple  provisions  are  often  neglected.  The  best  prac- 
tice is  to  have  two  scales,  one  for  heavy  weights  and 
one  for  light,  thus  securing  the  maximum  accuracy. 

Some  accountants  advocate  placing  in  stock  all 
goods  received  for  whatever  purpose  and  then  charg- 
ing them  as  they  are  issued.  This  is  unnecessary. 
Where  goods  are  ordered  for  special  purposes  it  is 
much  more  direct  to  charge  them  at  once  according 
to  those  purposes.  The  order  should  specify  for  what 
they  are  to  be  used  and  where,  so  that  the  receiving 
clerk  may  be  able  to  forward  them  to  the  proper  de- 
partment at  once  with  a  minimum  amount  of  handling 
and  delay. 

5.  Receipting  for  goods. — There  are  two  methods 
of  issuing  receipts  for  goods  received.  One  is  to  give 
a  formal  receipt  to  the  person  making  the  delivery. 
This  receipt  gives  the  order  number,  the  date  when 
the  article  was  received  and  a  description.  A  carbon 
copy  is  sent  to  the  purchasing  department.  The  sec- 
ond method  is  to  O.  K.  and  return  the  stock  room  copy 
of  the  original  purchasing  order.  The  second  method 
would  appear  the  better,  especially  in  small  concerns, 
in  that  it  reduces  the  clerical  worry  in  regard  to  both 
receiving  and  checking  bills.  The  practice  is,  how- 
ever, divided.  One  company,  for  instance,  uses  the 
original  order  in  its  electrical  department,  but  inde- 
pendent receipts  for  its  general  purchasing. 

The  second  source  of  supply  is  the  manufacture  of 
goods  for  stock.  The  production  order  should  cover 
this  class  without  any  additional  formalities.  The 


338      FACTORY  AND  OFFICE  ADMINISTRATION 

third  source  is  unused  materials  returned  by  work- 
men. Credit  memoranda  should  be  issued  for  this 
class  of  receipts.  They  should  be  distinguished  from 
requisitions  by  the  color  of  the  paper  or  of  the  print- 
ing. A  common  custom  is  to  use  red  ink  for  all  credit 
items  so  as  to  prevent  confusion. 

6.  Issuing  supplies. — Tools,  as  a  rule,  are  easily 
distinguishable  from  materials ;  but  they  run  together 
in  such  articles  as  brushes,  files  and  rubber  boots. 
Altho  generally  considered  as  tools,  these  articles  are 
worn  out  so  quickly  that  many  managers  invariably 
classify  them  as  materials  and  charge  them  out  as 
such.     Each  of  these  three  classes  of  goods — mate- 
rials, tools,  consumable  tools — should  be  distinguished 
and  issued  accordingly. 

7.  How  to  use  requisitions. — There  are  two  princi- 
pal systems  of  issuing  materials.     The  first  corre- 
sponds with  banking  practice.     If  a  depositor  wishes 
cash  at  a  bank  he  must  issue  a  "counter  check"  on  the 
paying  teller.     This  is  the  requisition  system.     The 
storekeeper  issues  stores  on  the  presentation  of  a  regu- 
lar order  or  requisition  signed  by  any  responsible  per- 
son (Figure  23).     In  office  stockkeeping  it  is  often 
advisable  to  combine  the  requisition  with  the  stock 
ledger  by  providing  columns  in  the  ledger  for  the 
name  of  the  person  authorizing  issue  and  for  the  sig- 
nature of  the  receiver.     This  lessens  the  clerical  work 
and  since  all  office  supplies  are  charged  to  expense 
there  is  no  object  in  charging  the  items  separately. 

8.  Bill-of -materials. — The  second  method  is  to  issue 


SAVINGS  IN  MATERIAL 


339 


the  materials  called  for  by  a  bill-of -materials  prepared 
by  the  designing  or  the  production  department.  This 
has  the  advantage  of  more  closely  meeting  the  actual 


Form  F-108      REQUISITION  No,       FOR  DEPARTMENT  SUPPLIES 
ORIGINAL 

TO  DEPT. Please  furnish  the  following  for  Department. 

V  Quantity  DESCRIPTION  ™"ni'    Price   Amount 

1 

2 
3 
4 
5 

G 
7 

8 

Date  Wanted     (Date  of  Requisition  Goods  Delivered          Entered  Entered  Entered 

Stores  Ledger        Stock  Ledger         Cost  Dept. 

impossible  to  fill 
his  requisition  by 
he  above  date  no- 
tify this  depart- 
iwntjmrnediately, 

FIGURE  23. — REQUISITION  FORM. 

requirements  and  so  conserving  material.  It  assists 
the  storekeeper  in  keeping  up  his.  stock  and  preparing 
for  future  requirements.  It  lessens  the  accounting 
because  it  eliminates  the  listing  and  totaling  of  many 
small  individual  requisitions. 


340      FACTORY  AND  OFFICE  ADMINISTRATION 

9.  Combination  systems. — Other  systems,  however, 
use  a  combination  of  these  two  methods.     The  bill-of- 
material  should  generally  be  used,  with  the  requi- 
sition as  the  flexible  element  to  meet  emergencies  and 
to  offset  clerical  errors  in  bills.     Some  managers  think 
it  is  better  policy  to  issue  material  when  it  is  called  for 
by  a  responsible  department  foreman,  and  to  adjust 
later  any  discrepancies  between  bills-of-material  or 
other  specifications  and  the  foreman's  statement  as  to 
his  requirements.     Under  no  circumstances  should 
production  be  stopped  pending  adjustment  of  tech- 
nicalities as  to  quantity  of  material.1     If  a  foreman  is 
to  be  held  responsible  for  results  he  must  be  given  a 
certain  amount  of  freedom.     Under  either  method  the 
man  actually  receiving  the  materials  should  be  re- 
quired to  sign  for  them  so  that  he  may  be  expected  to 
explain  any  overissue  which  may  occur. 

To  secure  a  new  consumable  tool  the  workman  must 
return  the  worn-out  tool  that  he  has.  To  get  a  new 
brush,  for  instance,  he  must  return  the  old  one ;  to  get 
a  new  pair  of  boots  he  must  return  the  worn-out  pair. 
This  plan  prevents  the  workman's  being  able  to  get 
new  tools  from  the  storeroom  any  time  that  he  loses 
his  old  ones,  and  also  gives  the  purchasing  department 
a  basis  for  judging  the  wearing  quality  of  the  goods. 
Replacement  of  defective  materials  and  issuance  of 
materials  on  account  of  spoiled  work  should  be  made 
by  this  method. 

10.  Complete  and  simple  system. — The  J.  L.  Mott 

i  Diemer,  "Factory  Organization,"  p.  118. 


SAVINGS  IN  MATERIAL  341 

Company's  tool-room  system  is  complete  and  simple. 
Each  man  is  given  twelve  checks  which  have  the  same 
number  and  are  specially  made  from  a  reversed  steel 
die  bearing  the  firm's  initials  so  they  will  not  be  dup- 
licated. Each  tool  in  the  department  is  represented 
by  a  3  x  5  filing  card.  When  there  is  more  than  one 
tool  of  a  kind  there  is  a  corresponding  number  of 
cards.  A  two-drawer  card-index  cabinet  is  used. 

In  drawer  No.  1  the  guide  cards  represent  the  shelv- 
ing, bins,  drawers,  etc.,  of  the  tool  room.  Behind 
these  the  tool  cards  are  placed.  In  drawer  No.  2 
there  is  a  guide  card  for  each  man,  numbered  to  corre- 
spond with  his  checks.  When  a  man  presents  his 
check  for  a  tool  at  the  window,  the  check  is  hung  on 
the  checkboard  and  the  tool  card  is  taken  from  its 
regular  place,  drawer  No.  1,  and  placed  back  of  the 
workman's  guide  card  in  drawer  No.  2.  When  the 
tool  is  returned  the  man  receives  his  check  and  the 
tool  card  is  put  back  in  its  proper  place  in  drawer 
No.  1.  If  a  tool  is  broken  or  lost  the  card  is  taken 
out  of  drawer  No.  1,  and  after  being  marked  "broken" 
or  "lost"  is  placed  behind  a  guide  marked  "broken  or 
lost"  in  drawer  No.  2.  Thus  the  checkboard  shows  at 
a  glance  how  many  tools  a  man  has  and  the  total  num- 
ber of  tools  out.  Drawer  No.  2  shows  what  tools  are 
in  the  shop  and  thus  the  need  of  referring  to  the 
shelves  is  obviated. 

11.  Single  and  double  check  system. — The  simplest 
method  of  issuing  tools  is  to  give  each  workman  a  sup- 
ply of  brass  checks,  say  ten.  When  the  man  gets  a 


342      FACTORY  AND  OFFICE  ADMINISTRATION 

tool  he  hands  in  a  check  which  is  substituted  for  the 
tool.  This  is  the  single-check  system. 

In  the  double-check  system,  which  is  in  common  use, 
each  man  is  represented  by  two  adjacent  hooks  on  the 
tool-room  checkboard.  Ten  round  checks  are  issued 
to  the  man  when  he  starts  work,  and  ten  square  checks 
bearing  the  same  number  are  hung  on  one  of  his  hooks. 
When  he  calls  for  a  tool  he  presents  one  of  his  round 
checks.  This  is  then  placed  on  the  hook  from  which 
the  round  checks  were  taken.  At  the  same  time  one 
of  the  square  checks  is  taken  off  and  placed  in  the  tool 
rack,  case  or  drawer  from  which  the  tool  is  taken. 
When  he  returns  the  tool  he  is  given  back  his  round 
check,  and  the  square  check  is  taken  from  the  rack, 
case  or  drawer  in  which  it  had  been  placed  as  a  substi- 
tute for  the  tool.  This  system  enables  the  tool-room 
foreman  to  tell  by  the  number  of  round  checks  hang- 
ing on  any  man's  hook  just  how  many  tools  he  has  out, 
but  it  does  not  show  what  tools  they  are,  as  does  the 
Mott  Company's  system.1 

12.  Responsibility  for  remainder  on  hand. — In  or- 
der that  the  stockkeeper  may  be  held  responsible  for 
the  stock  and  tools  on  hand  he  must  have  complete 
authority.  The  stock  room  must  be  under  lock  and 
key  and  no  one  except  the  storekeeper  should  be  al- 
lowed access.  This  is  essential.  Unless  he  is  thus 
protected,  the  storekeeper  cannot  justly  be  held  ac- 
countable for  the  stores.  If  two  men  have  joint 
charge,  each  can  blame  the  other  and  it  is  never  pos- 

i  Diemer,  "Factory  Organization,"  p.  159. 


SAVINGS  IN  MATERIAL  343 

sible  to  place  the  responsibility  absolutely.  Thus,  we 
see  separate  cash  registers  in  large  stores.  Each 
clerk  has  a  cash  drawer  of  his  own  and  so  is  responsible 
for  any  shortage  in  his  own  drawer. 

13.  Stock  room  protects  goods. — The  stock  room 
must  also  protect  goods  from  depreciation.  Only 
heavy  goods  of  little  value  should  be  stored  out  of 
doors,  and  these  should  be  protected  from  the  weather 
by  sheds  or  tarpaulins.  Finished  surfaces  should  be 
greased  to  prevent  rust  even  if  they  are  kept  under 
cover.  The  Robert  Gair  Company,  paper  goods 
manufacturers,  state  that  one  of  the  advantages  of 
their  new  concrete  building  is  that  it  annually  saves 
fully  $5,000  which  it  formerly  lost  thru  damage  done 
by  vermin. 

Fire  is,  however,  the  main  cause  of  loss,  and  special 
precautions  should  be  taken,  especially  with  respect  to 
goods  of  value  and  all  records.  Thus  in  Armour  and 
Company's  office  building  and  in  other  modern  build- 
ings there  is  a  built-in  fire-proof  vault  for  office  rec- 
ords. In  the  American  Bridge  Company's  drafting 
room  there  is  a  fire-proof  vault  for  drawings.  Such 
practice  is  becoming  universal.  Where  records  and 
drawings  are  not  thus  protected  a  duplicate  set  should 
be  kept  somewhere  outside  the  office  building,  as  an  in- 
surance measure. 

To  prevent  goods  from  being  kept  too  long  the 
Watertown  arsenal  introduced  the  so-called  two-bin 
system.  Two  bins,  A  and  B,  are  provided  for  each 
article.  While  the  goods  in  A  are  being  used,  all  new 


344      FACTORY  AND  OFFICE  ADMINISTRATION 

goods  received  are  put  in  B.  When  A  is  empty,  B  is 
started  and  new  goods  are  put  in  A.  Thus  the  ma- 
terial is  used  in  the  order  of  its  receipt  instead  of  its 
being  possible  for  old  material  to  collect  at  the  bottom 
of  the  bin,  as  is  the  case  when  new  material  is  dumped 
in  on  top  of  the  old.  The  two-bin  system  is  especially 
applicable  to  the  handling  of  stationery,  which  yel- 
lows with  age,  so  that  often  under  the  old  system  the 
bottom  of  a  pile  has  to  be  thrown  out. 

14.  Classification  by  kind. — Materials  should  be 
classed  by  kind,  not  by  size.  Some  unit,  such  as  24 
inches,  should  be  adopted,  and  the  shelves  should  be 
divided  into  square  compartments.  These  compart- 
ments can  then  be  subdivided,  as  the  necessity  arises, 
without  changing  the  shelving.  There  are  two  sys- 
tems involving  such  arrangement. 

The  way  to  number  bins  in  stock  warehouses  is  to  divide 
the  whole  cubic  volume  of  the  house  into  spaces  and  allot  a 
certain  number  of  spaces  to  each  volume,  whether  the  volume 
is  to  contain  large  or  small  bins.  In  this  way,  no  matter 
what  changes  or  rearrangement  in  the  sizes  of  the  bins  there 
may  be,  the  same  number  will  always  designate  the  same 
space  in  the  warehouse.  For  instance,  all  bins  numbered  in 
the  ten  thousands  would  represent  bins  in  aisle  10,  those  be- 
ginning with  10,500  representing  the  bins  on  one  side  of  the 
aisle,  and  those  beginning  with  10,000  the  bins  on  the  oppo- 
site side  of  the  aisle.  If  the  bins  are  large,  of  course,  a  great 
many  numbers  will  not  be  used.  This  is  practically  the  same 
principle  that  has  been  finally  adopted  as  the  most  satisfac- 
tory method  of  numbering  houses  in  city  streets,  and  will  be 
found  equally  satisfactory  in  storage  and  warehouses.1 

i  Diemer,  "Factory  Organization,"  p.  114. 


SAVINGS  IN  MATERIAL  345 

The  placing  of  even  numbers  on  one  side  of  the  aisle 
and  odd  on  the  other,  as  is  done,  for  example,  in  the 
numbering  of  theater  chairs,  has,  however,  some  ad- 
vantages over  this  method. 

It  is  also  well  to  place  near  the  delivery  point  those 
goods  which  are  much  used  and  to  locate  at  the  back 
of  the  storeroom  those  which  are  seldom  used.  Where 
this  system  is  adopted  it  is  necessary  to  have  "finding 
lists"  or  card  indexes  giving  the  location  of  the  sup- 
plies. Where  the  stock  room  is  large  or  where  there 
are  several  floors,  it  will  save  time  to  have  several  such 
"finding  lists"  at  convenient  points. 

The  second  method  is  alphabetical  and  calls  for  an 
arrangement  in  accordance  with  the  material  or  tool 
symbols.  These  symbols  are  marked  on  the  end  of 
the  tiers  so  that  anyone,  even  if  he  is  not  familiar  with 
the  stock-room  layout,  can  find  anything  in  stock  ex- 
actly as  he  would  locate  a  name  in  the  city  directory. 
This  system  follows  the  general  tendency  to  simplify 
the  work  and  eliminate  the  index  which  is  discernible 
in  loose-leaf  ledgers,  in  card  systems  and  in  the  open- 
shelf  fiction  classification  of  the  public  libraries.  The 
procedure  is  the  same  whether  a  lead  pencil  or  a  blow 
valve,  a  box  of  envelops  or  a  rough  casting  is  cata- 
loged. Of  course  some  kind  of  symbol  system  is  a 
prime  requisite. 

15.  Size  materials  when  checking. — The  handling 
of  materials  is  facilitated  by  sizing  materials  the  first 
time  they  are  checked;  this  eliminates  the  need  of 
doing  it  again.  The  Salford  Rolling  Mills,  Man- 


346      FACTORY  AND  OFFICE  ADMINISTRATION 

Chester,  paint  the  weights  on  all  castings  when  they 
leave  the  foundry.  The  Thompson- Starrett  Com- 
pany paint  the  length  of  all  heavy  timbers  on  both 
ends  so  that  one  can  tell  just  what  is  in  the  yard  by 
looking  at  the  ends  of  the  piles.  Some  companies 
indicate  the  kind  of  steel  by  painting  one  end  a  certain 
color.  The  Tabor  Manufacturing  Company  of  Phil- 
adelphia paint  their  bolts,  washers,  clamps,  etc.,  used 
in  setting  up  work  in  machine  tools,  with  bright  colors, 
such  as  red,  blue,  green,  which  immediately  designate 
them  as  tool  equipment.  Adequate  hoists,  tool  boxes, 
etc.,  for  the  handling  of  the  material  should  be  pro- 
vided. 

16.  Stock  ledger  and  inventory-taking. — The  stock 
ledger  is  usually  kept  in  the  dispatching  or  planning 
department  to  facilitate  routing.  Where  the  system 
of  dispatching  has  not  yet  been  introduced,  the  stock 
ledger  is  usually  kept  in  a  card  or  loose-leaf  ledger. 

Standard  designs  are  carried  in  stock  by  most  of  the 
manufacturers  of  loose-leaf  and  card  systems.  A 
useful  stock  form  of  the  C.  E.  Sheppard  Company  is 
shown  in  Figure  24.  The  sequence  of  the  items  varies 
in  different  companies.  C.  B.  Cottrell  &  Sons  place 
the  balance  between  the  received  and  delivered  col- 
umns. The  C.  W.  Hunt  Company  places  the  order 
number  after  the  amount  delivered  but  before  the 
balance  on  hand.  The  Wells  Brothers  Company 
provides  separate  date  columns. 

In  order  to  verify  the  stock  on  hand,  the  balance-of-stores 
clerk  spends  an  hour  a  day  in  the  storeroom  checking  up. 


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347 


348      FACTORY  AND  OFFICE  ADMINISTRATION 

Each  day  he  takes  a  certain  number  of  items  and  counts  and 
weighs  them,  comparing  the  results  with  the  figures  on  his 
sheets.  To  go  thru  the  whole  stock  room  requires  six  months, 
so  that  during  the  year  two  full  inventories  are  taken.1 

Another  method  is  to  check  each  article  when  the 
quantity  on  hand  is  low;  this  system  involves  a  mini- 
mum of  work.  Slight  discrepancies  are  bound  to  oc- 
cur, because  fallibility  on  the  part  of  a  stock  clerk  is 
far  more  common  than  infallibility  of  records.  When 
discrepancies  are  marked,  or  appear  as  continual 
shortage  in  the  more  valuable  materials,  they  should, 
of  course,  be  investigated,  but  in  general  they  should 
simply  be  written  off.  In  either  case,  that  bugbear, 
the  annual  "taking  account  of  stock,"  is  entirely  un- 
necessary. 

17.  Losing  time  on  cheap  rather  than  expensive 
operations. — If  two  men  are  dependent  upon  each 
other,  the  less  expensive  must  wait  upon  the  more 
expensive.  Theoretically  it  should  be  possible  for 
them  to  exactly  tie  into  each  other.  Practically  this 
is  not  so.  Unless  the  cheaper  serves  the  more  expen- 
sive, the  more  expensive  man  or  machine  will  do  the 
waiting.  For  instance,  if  men  were  loading  trucks 
with  dirt,  it  should  be  possible  to  proportion  them  ex- 
actly so  that  one  truck  would  drive  on  to  be  loaded 
while  the  one  ahead  was  driving  away  full.  As  an 
actual  fact  it  is  not  possible  and  under  such  circum- 
stances the  men  will  be  waiting  for  the  trucks  or  the 
trucks  will  be  waiting  to  be  loaded ;  they  will  be  wait- 

i  E.  M.  Woolley  in  System,  June,  1911. 


SAVINGS  IN  MATERIAL  349 

ing  for  one  another  during  different  parts  of  the  day. 
It  is  therefore  necessary  to  decide  which  of  the  two 
causes  of  delay  is  the  more  expensive,  and  supply 
either  enough  men  to  keep  the  trucks  moving  or 
enough  trucks  to  keep  the  men  busy. 

18.  Principles  of  general  application. — These  prin- 
ciples apply  thruout  business.  If  the  man's  time  is 
more  valuable  than  the  material  used,  he  must  be  given 
a  leeway;  otherwise  he  will  have  to  adapt  himself  to 
the  material.  If  the  material  is  more  valuable  than 
the  man's  time,  he  must  adapt  himself  to  the  material ; 
otherwise  he  will  waste  it.  Such  is  the  case  in  gold- 
smithing;  the  workbench  is  laid  out,  not  so  much  for 
the  man's  convenience,  as  to  save  the  gold  filings. 
This  reasoning  applies  with  special  force  to  office 
work.  If  an  executive's  time  is  worth  more  than  a 
clerk's  he  must  be  supplied  with  a  sufficient  clerical 
force;  otherwise  he  will  be  doing  the  clerical  work 
himself  at  the  expense  of  more  important  work.  The 
less  expensive  unit  should  be  made  to  wait  upon  the 
more  expensive. 

REVIEW 

A  visitor  in  a  large  manufacturing  plant  noticed  that  workmen 
were  running  here  and  there  looking  for  materials,  tools,  etc. 
In  what  way  could  the  stockkeeping  department  aid  in  cutting 
down  the  time  lost  by  these  workmen  in  leaving  their  work? 

Why  do  some  purchasing  agents  blank  the  quantity  on  an  in- 
voice which  goes  to  the  receiving  clerk? 

What  economical  method  of  issuing  receipts  for  goods  received 
would  you  advise  for  a  small  concern? 

A  depositor  goes  to  a  bank  to  draw  money.  He  writes  out  his 
check  for  the  amount  and  presents  it  to  the  cashier.  What 
IV— 24 


350      FACTORY  AND  OFFICE  ADMINISTRATION 

suggestion  is  there  in  this  transaction  for  the  office  or  factory 
manager  who  permits  employes  to  get  their  materials,  tools, 
supplies,  etc.,  without  going  to  the  expense  of  having  a  stores 
clerk  look  after  them? 

How  does  a  bill  of  materials  affect  the  stockkeeping  depart- 
ment? the  accounting  department? 

How  do  some  managers  check  the  discrepancies  between  a  bill 
of  materials  or  other  specification  and  the  foreman's  statement  as 
to  his  requirements? 

Devise  a  general  policy  for  the  stockkeeping  department,  of 
such  a  nature  that  by  means  of  it  responsibility  can  be  placed  for 
the  stock  and  tools,  and  depreciation  due  to  exposure  of  materials, 
etc.,  can  be  held  within  reasonable  limits. 

Devise  a  stock-ledger  form  that  would  enable  you  to  control 
the  balance  of  stores  without  taking  an  inventory. 


INDEX 


Accounting  Department,  Analysis  of, 
as  a  unit  of  management,  95-96, 
120,  122 

American  Bankers'  Association,  Educa- 
tional institute  provided  for  em- 
ployes, 255 

Anel,  C.  B.,  on  '  'The  Work  of  Shop  In- 
spection," 290,  304-05 

Association  of  Employes,  Educational 
courses  of  N.  Y.  Edison  Com- 
pany, 253-54 


Blumenthal,  O.  A,,  Application  blanks 
and    self-analysis,    249-51 


Carpenter,   0.  U., 

on  Standardizing  products,  197-98; 
on  Standard  assembling  time, 
223-24 

Chalmers,  Hugh,  Methods  of  select- 
ing employes,  247—49 

Collaboration, 

and  Centralized  control,  17-20; 
Distribution  of  detail,  26-29; 
Reorganization  problems,  31;  Re- 
sponsibility distributed,  36;  As- 
sociated interests  and  efficiency, 
44-45,  52;  Specialization  and 
science  of  management,  71-81; 
Committee  system  of  manage- 
ment, 113-14,  133-34;  Produc- 
tion clerk's  duties,  152-53,  154- 
55;  Organization  saves  time,  331 

Commission  on  Standardization,  Sav- 
ings effected  in  New  York  City, 
194 

Committee  on  Employment  Plans,  Re- 
port on  labor  turnover,  51 

Committee   System, 

Methods  of,  113-14;  In  office 
management,  133—34 

Competition, 

Eliminating  wastes,  48-49;  Unsys- 
tematized  type  of  management, 
109-10;  Speed  and  work  records 
stimulate  incentive,  275-76 

Control      of      Labor — Selection      and 

Training, 
Selecting     applicants,     methods     by 


351 


Control  of  Labor — continued 

Chalmers  and  Taylor,  247-48; 
Self-analysis  in  application 
blanks,  249-51;  Written  and 
oral  tests,  251-52;  Physical  and 
moral  qualities  analyzed,  252 ; 
Education  for  separate  industries, 
253,  255-56;  Commercial  and 
technical  courses,  253-63;  Met- 
ropolitan Life  Insurance  Com- 
pany's business  course,  254; 
Training  schools,  types  of,  254- 
63;  Firms  give  specific  training, 
256;  Manuals  educate  employes, 
256-57;  Department  Store  Edu- 
cational Association,  260;  Na- 
tional Commercial  Gas  Associa- 
tion, educational  courses,  260— 
63 

Control    of    Labor — Wages,     Records 

and   Promotions, 

Man-power  costly,  265—66;  Science 
of  labor  control,  266-68;  "Mis- 
fit" employes,  267;  Fatigue  and 
rest,  science  of,  268-69;  Wages 
determined  by  output,  illustra- 
tions, 269-72;  Rates  of  increase 
of  wages,  272-73;  Wages  the 
chief  incentive,  273,  274;  Short- 
period  records  a  stimulus,  275— 
76;  Environment  affects  effi- 
ciency, 276—78;  Efficiency  records 
valuable,  278-81;  H.  L.  Gantt  on 
records,  280 ;  Permanency  of  em- 
ployment, and  pensions,  281—82; 
Advancement,  and  rule  of  senior- 
ity, 282-83 

Corporate     Organization,      Managerial 
unit    for    directing   finances,    86- 


Day,     Charles,     on    Routing    methods 

in    "Industrial  Plants,"    313 
Democracy     in     Industry,      Professor 

Carver   on,    53-54 
Departmental    Grouping, 

Cooperation   and   specialization,    70— 
76;     Organization    analyses,     86- 
99 
See  also  What  Management  Involves 


352 


INDEX 


Department  Store  Education  Associa- 
tion, Training  employes,  260 

Derby  Desk  Company,  Mnemonic  sys- 
tem valuable,  203-05,  206-07 

Diemer,  Hugo, 

on  Routing  methods,  312-13;  on 
Stock-keeping  methods,  340,  344 

Distinctions  Between  Economics,  In- 
dustry and  Business,  85-86 

Duncan,  J.  C.,  on  Industrial  expan- 
sion, 314 

Economics, 

Dominating  forces,  and  business 
planning,  5-6;  Planning  prob- 
lems, and  copartnerships,  21—22; 
Industrial  auditing  and  labor 
turnover,  47-51 ;  Human  en- 
gineering, 60—63 ;  Economic  units, 
and  fundamental  branches  of, 
83-85;  Systematized  manage- 
ment advantageous,  112—13; 
Planning  department  promotes 
efficiency,  142,  146-51;  High  cost 
of  man-power,  265  et  seq. 
See  also  Organization  of  Adminis- 
tration 

Education,  Basis  of  Control, 

Commercial  and  technical  training, 
253—63;  Proceedings,  and  aids 
in  management,  299,  303-04 

Emerson,    Harrington, 

on  Efficiency  standards,  190;  on  Ef- 
ficiency tests,  268;  on  Stock- 
keeping,  334 

Engineer  and  Manager,  Commercial 
appraisal  and  technical  judgment, 
67-68 

Era  of  the  Administrator, 

Industrial  expansion,  1-2;  Com- 
plexities of  business  administra- 
tion, 2-3;  Responsible  policy 
needed,  3—4 ;  Presumptive  per- 
sonality, 4;  Economic  forces  to 
dominate,  4-5;  Present-day  op- 
portunities, 5-6;  Social  trend  of 
specialization,  6—7;  Organizing 
ability  and  division  of  labor,  7- 
8;  Executive  ability  and  leader- 
ship, 8—9 ;  Administration  im- 
plies successful  conduct  of  af- 
fairs, 8-9;  Scale  of  responsibil- 
ity varies,  9-11;  Thought,  basis 
of  administration,  11-13 
See  also  Factory  Management  and 

Office   Management 
See    also   Organization    of   Adminis- 
tration 

Executive  Ability, 

Definition    of,    9;    Subordination    of 


Executive  Ability— continued 

responsibility,  26-32;  Wise  pol- 
icy in  planning,  33-34;  Func- 
tional planning,  and  efficiency, 
107-09,  115 

See  also  Planning 

See     also     What     Management     In- 
volves 
Executive  Orders, 

and  Collaboration,  24-25;  Funda- 
mentals in  organization,  25-26; 
Subordination  of  detail,  26-27; 
Classes  of,  and  examples,  27-30; 
General  and  special,  28-29;  Im- 
practical methods  of  control,  30- 
31;  Improvised  administration, 
31 
Executive  Supervision, 

Function  in  leadership,  33 ; 
Thoughtful  reasoning  more  expe- 
dient, 33-34;  Administrative  lim- 
itations, .  34-35 ;  Grades  of  au- 
thority, 35;  Boundaries  of  au- 
thority, 35-36;  System  and  the 
"Master's  eye,"  36-37;  Ele- 
ment of  surprise,  37-38;  Inspec- 
tion and  control,  38-39;  Sympto- 
matic details,  39-40 


Factory   Management, 

Government  practice  and  red  tape, 
101-02;  Essentials  of  organiza- 
tion, 103-04;  Organization  types 
designated,  104-05;  Staff  and 
military  methods,  104-06;  Sher- 
win-Williams Company's  staff  and 
line  control,  106-07;  Duties  of 
foreman,  107—08;  Functional 
foreman,  a  division  of  labor,  108; 
Planning  department  foremen, 
109;  Unsystematized  plants  in 
majority,  109-11;  Systematized 
types,  features  of,  111-12;  Cost 
records,  and  efficiency,  112-13; 
Work  of  committee  system,  113- 
14;  Divisional  and  departmental 
problems,  114-17;  Planning  in 
advance,  117;  Subordinating  po- 
sitions, 118;  Primitive  form  of 
management,  118-19 
See  also  Planning  Production — The 

Factory 

See    also    Types    of    Management — 
Factory 

Financial  Department,  Analysis  of, 
as  a  unit  of  management,  94,  120, 
122 

Forms  and  Records, 

Cost  records   in   factories,    110—13; 


INDEX 


353 


Forms  and  Records — continued 

Office  records  and  departments, 
121-22;  Organization  records, 
142—43 ;  Factory  planning  meth- 
ods, 161-68;  For  office  data, 
179-80;  Time  standards  and  ef- 
ficiency, 219;  Record  systems  aid 
employes,  275-76;  Time-study 
formulas,  299-302 ;  Dispatching 
and  progress  reports,  321-29; 
Requisitions  and  stock  ledgers, 
338-39,  346-48 

Functional  Type  of  Organization, 
In     factory     management,     107—09; 
Specific   office   tasks,    130-32 

Gantt,  H.  L.,  Production  sheet  rec- 
ords, 325,  327 

Gilbreth,  Frank  B.,  Time  study  and 
wage  systems,  233,  235 

Gilbreth,  L.  M.,   on  Planning,   169 

Graphs  and  Statistics,  Sources  of  in- 
formation, 285-95 


Halsey,  F.  A.,  Halsey-Towne  pre- 
mium system  of  wage  rates,  232, 
240-41 

Hathaway,  H.  K., 

on  Shipment  dates,   156;   on  Stand- 
ard   time    in    handling,    221 

Human  Engineering,  Conserving  the 
working  force,  60-63 


Industry, 

Types  of  business  expansion,  1-2; 
Administrative  problems  of,  1-3; 
Rewards  and  penalties,  42-54; 
Organization  factors,  103-04, 
120;  Staff  and  military  types  of 
management,  104-06,  113,  129- 
30 ;  Foremen ;  old  and  new  types, 
107-09,  130;  Unsystematized 
versus  systematized  plants,  109— 
13;  Committee  system,  113-14, 
133-34;  Special  types,  synopsis 
of,  114-17;  Organization  charts 
for  scientific  management,  132, 
139-41 ;  Planning  department  to 
promote  output,  145-51;  Plan- 
ning department  of  a  factory, 
152-70;  Wage  systems,  226-37; 
239-46;  Control  of  labor,  prob- 
lems of  education,  247-63; 
Graphic  charts  and  statistics, 
285-95;  Inspection  methods  of 
Westinghouse  Company,  290—93, 
296,  305;  Analytic  manufacture, 


Industry — continued 

310-11;  Continuous  manufacture, 
311;  Assembling  manufacture, 
311-12;  Schedules  and  progress 
reports,  321-31;  Avoiding  power 
shortage  and  shutdowns,  331-33; 
Economics  of  shop  and  office, 
351-59 

See  also  Labor 

See  also  Organization  of  Adminis- 
tration 

See   also   Rewards    and    Penalties 

See  also  Standardization  and  La- 
bor 

See     also     What     Management     In- 
volves 
Instruction, 

and  Science  of  management,  75- 
81;  Duties  of  cost  clerk,  168; 
Factory  performance,  170;  St'and- 
ard  times,  219-20 

See    also   Education,    Basis    of    Con- 
trol 
Invention, 

Applied  to  administrative  problems, 
6,  8 ;  Specialization  and  science 
of  management,  68—81 ;  Scientific 
methods  of  fixing  wages,  232- 
87,  239-46 

Labor, 

Employment  specialist  and  audit 
analysis,  46-47;  Trade-union's  in- 
fluence upon  employes,  46-47, 
52-53;  Discharge  and  testimo- 
nials, 48;  Factory  turnover  and 
waste,  49-51;  Wage  adjustment, 
and  the  unions,  52-53;  Identity 
with  capital  and '  land,  in  man- 
agement, 57-60;  Specialization 
in  management,  69—81;  Organi- 
zation charts,  132,  139-41; 
Planning  department  increases 
output,  145-51;  Planning  de- 
partment, functions  of,  152—70; 
Standardization,  and  efficiency 
problems,  190 ;  Wage  systems 
and  standards,  226-37,  239-46; 
Routing,  to  save  time.  308-19; 

See  also  Control  of  Labor 

See  also  Factory  Management 

See  also  Industry 

See  also  Standardization  and  La- 
bor 

"Limiting    Dimensions,"    and    Stand- 
ardization of  parts,   199 

Managerial  Units,  Corporate,  staff  and 
line    organization,    86-94,    97-99 


354 


INDEX 


Manufacture,    See    Industry 

Materials  and  Stores, 

See  Savings  in  Material — Stock- 
keeping 

See  Standardization — Materials  and 
Equipment 

Military  Type  of  Organization, 

In  factory  management,  104,  105— 
OG ;  Department  heads  control, 
129-30 

Modern    Aids    in    Management — Plan- 
ning, 

Policies,  not  details,  138;  Adjust- 
ing authority  to  responsibility, 
138-39,  141;  Organization  charts 
requisite,  139—41;  Records  sup- 
plement charts,  142-44;  Con- 
fusion thru  lack  of  control,  144; 
Nonproductive  labor,  145 ;  Plan- 
ning and  specialization,  146—47; 
Planning  department  expenses, 
146-48;  Output  increased  by 
planning  specialists,  147-48; 
Evolution  of  planning  depart- 
ment, 148-51 

Monetary    Savings    Due    to    Standard 
Materials,   194,   197,   198 


Napoleon,      Military      principles      the 

basis   of   administrative   planning, 

15-18,    24 
National    Metal    Trades    Association, 

and    Industrial    training    schools, 

254 


Orders,  See  Executive  Orders 

Organization, 

Types  of  industrial  enterprise,  1—2, 
5,  7—8 ;  Planning  and  centralized 
control,  14—20 ;  Economic  prob- 
lems and  cooperative  schemes, 
21—22;  Subordination  of  author- 
ity divides  responsibility,  25-27, 
36;  Military  tactics  and  collabo- 
ration in  planning,  28—32;  Spe- 
cialization makes  complex,  68— 
71,  74-76,  79;  Technical  experts 
for,  91;  Management  types  of 
control,  103-05;  Military  and 
staff  control.  104,  105,  106,  129; 
Foremen  specialists,  107-09,  130; 
Unsystematized  plants  in  major- 
ity, 109-11;  Committee  systems, 
113-14,  133-34;  Divisional  types 
of  management,  114-17;  Charts 
and  records  to  define  groups, 
132,  139-44;  Planning  depart- 
ments, 142,  146-51;  Planning 


Organization — continued 

department  of  a  factory,   152-70; 
Clerical  work  and  functional  con- 
trol  of,    172-84;    H.   A.   Hopf   on 
office     planning,      185-86;      Time 
schedules   and   routing,    321-31 
See   also    Organization    of   Adminis- 
tration 
Organization   of  Administration 

Principles  and  methods  of  manage- 
ment, 82-83;  Determining  eco- 
nomic units,  83-84;  Industrial 
units,  84;  Economics,  industry 
and  business,  85-86;  Managerial 
units,  86-90;  Manager's  cabinet 
of  experts,  90;  Industrial  prog- 
ress and  expert  organization, 
90-91;  Relation  of  experts  to 
general  manager,  92-94;  Analy- 
sis of  financial  department,  94; 
Analysis  of  sales  department, 
94-95;  Accounting  department 
responsible  for  records,  95-96; 
Production  department,  96 ; 
Chart  necessary  to  an  organiza- 
tion, 97 ;  Corporate  management 
duties,  98-99 

See   also   Era   of   the   Administrator 
See  also  Executive   Orders 
See     also     Principles     of     Business 

Management 
See  also  Rewards  and  Penalties 


Pensions, 

and  Permanency  of  employment, 
281-82;  Pennsylvania  Railroad 
pioneer  in  establishing,  304 

Performing    Department,    Planning   in 
factories,    170 

Personal  Leadership, 

Napoleon  exemplifies,  15-18;  Col- 
laboration in  planning,  19-20; 
Executive  committee  substituted 
for,  20;  Three  functions  in,  dis- 
cussed, 33 

Planning, 

Need  for  preparation,  5—8 ;  Admin- 
istrator's  importance  in,  12; 
Military  and  business  administra- 
tion analogous,  14—19;  Napoleon 
an  exponent  of,  15-18;  Details 
adjusted,  16;  Collaboration  and 
centralized  control,  17-19;  Per- 
sonal leadership  and  modern 
methods,  19-20;  Economic  prob- 
lems, three  classes  of,  21-22; 
First  function  in  leadership,  33- 
34,  37,  39;  Department  foremen 
and  work  assigned,  107-09,  130; 


INDEX 


355 


Planning — continued 

Advantages  of,  117;  Scientific 
wage  systems,  231—46;  Routing 
methods,  307-19;  Dispatching 
and  routing,  321-29 

See  also  Modern  Aids  in  Manage- 
ment— Planning 

See  also  Planning  the  Clerical 
Work 

See  also  Planning  Production — The 

Factory 
Planning    Production — The    Factory, 

Clerks,  and  subdivisions,  152 ;  Pro- 
duction clerk,  coordinating  duties 
of,  152-53,  154-55;  Sales-delivery 
dates,  153-54;  H.  K.  Hathaway 
on  delivery  of  products,  156; 
Route  clerk,  156-59,  163;  Foun- 
dry clerk,  159-60;  Balance-of- 
stores  clerk,  160-62;  Time-study 
clerk,  163;  Instruction-card 
clerk,  163;  Route-file  clerk,  163- 
64;  Order-of-work  clerk,  164-66; 
Recording  clerk,  166;  Cost  clerk, 
166-68;  Timekeeper,  168;  L.  M. 
Gilbreth  on  planning,  169;  Per- 
founing  department,  functions  of, 
170 

See  also  Planning 
Planning  the  Clerical  Work, 

Office  systems  reorganized,  172-73; 
Functional  control  in  offices,  173- 
74;  Planning  department,  174— 
75,  184-86;  New  policies  involve 
new  methods,  175-76;  Keeping 
the  organization  in  order,  176— 
78 ;  Department  records  and 
standards,  178-84;  Office  manual 
for  records,  179;  Special  data 
book,  179;  Instruction  cards, 
179-80;  Standardization  of  equip- 
ment, 181-82;  Developing'  bet- 
terment plans,  183;  Welfare  pol- 
icies, 184;  H.  A.  Hopf  on  plan- 
ning, 185 

See   also    Planning 

Porter,  H.  F.  J.,   on  Management,  97 
Premium    Systems, 

Scientific  wage   fixing,   229-37 

See   also   Wage    Systems 
Principles    of   Business   Management, 

Essential  elements  of,  55;  Energy 
a  vital  force,  56;  Capital,  labor 
and  land  the  sources  of  manage- 
ment, 56-58;  Manager  directs 
forces,  58-60;  Conserving  the 
human  product,  60-62;  Mechan- 
ical invention  and  conservation 
of  energy,  62-63;  Purpose  of  en- 
terprise is  profits,  63-64;  Paying 


Principles — continued 

dividends  cuts  future  profits,  64- 
65 

See   also   Types   of   Management 
See  also  What  Management  Involves 

Prizes  and  Distinctions,  Rewarding  la- 
bor, 42-44 

Production    Department,    Analysis    of, 
as   a  unit,    96,    120 

Profit  versus  Management,   63-65 

Research, 

Savings  in  time  effected  by,  296- 
306;  J.  I.  Case  Company's  lab- 
oratory, 297-98 

Responsibility, 

Scale  of,  proportionate  to  duties,  9- 
11;  Administrative  planning,  14- 
22;  Division  of,  constitutes  or- 
ganization, 25-32;  First  princi- 
ple of  supervision,  35-36;  Moral 
tests,  45;  Difference  between 
manager  and  engineer,  67;  Spe- 
cialization complicates,  68-72, 
76;  Cooperation  and  science  of 
management,  74-76 ;  Functional 
foremen,  107—09;  Organization 
charts  to  define,  132,  138-42; 
Planning  departments,  142,  146- 
51 

Rewards  and  Penalties, 

Fear  and  interest,  motives  to  action, 
42-43;  Ruling  by  division,  42; 
Prizes  and  distinctions,  43-44; 
Associated  interests,  44;  Disci- 
pline and  internal  impulse,  44- 
45;  Moral  responsibility,  45;  Em- 
ploying labor,  46;  Industrial  au- 
diting, 46-48;  Changed  attitude 
toward  employes,  48 ;  Turnover 
wastes,  and  cases  of,  49-51;  Re- 
port of  Committee  on  Employ- 
ment Plans,  51;  Labor  a  rela- 
tionship, 51;  Wage  adjustment, 
and  influence  of  trade-unions,  52- 
53 ;  Professor  Carver  '  on  de- 
mocracy, 53-54 

Routing,    Time-saving    methods,    307- 
19 

Ruling  by  Division,  42-43 


Sales  Department,  Analysis  of,  as  a 
unit,  94-95,  120 

Savings  in  Material— Stock-keeping, 
Expert  storekeepers,  334;  Stock- 
keeping  rules,  335-36;  Checking 
supplies,  336-37;  Receipting  for 
goods,  337;  Requisition  ays- 


INDEX 


Savings  in  Material — continued 

terns,  338-39;  Combination  sys- 
tems, 340;  J.  L.  Mott  Company's 
tool-room  system,  340-41;  Single 
and  double  check  system,  341— 
42;  Storekeeper's  responsibility, 
342—43 ;  Storage,  and  two-bin 
system,  343-44;  Classifying 
materials,  344-45;  Stock  ledger 
and  inventory,  346-48;  Expensive 
unit  and  service,  348—49 

Sayings     in     Time-Dispatching;     Aux- 
iliary Appliances, 

Special  dispatching,  321;  Planning, 
and  the  route-board,  321-24; 
Progress  reports,  325-28,  329; 
Routing  office  work,  328,  330; 
Clearing-house  schedules,  330- 
81;  Organization  saves  time, 
331;  Substitute  power  equip- 
ment, 331-32;  Maintenance,  and 
shutdowns,  332-33 

Savings  in  Time;    Research  and  Rec- 
ords 

Value  of  research,  296;  J.  I.  Case 
Company's  laboratory,  297-98; 
Time-study  methods  by  F.  W. 
Taylor,  299-300;  Formulas  for 
time-study,  301-02;  Educational 
aids,  303-04;  Competitive  meth- 
ods studied,  304-05 ;  American 
firms  supply  information,  305-06; 
Consulting  experts,  306 

Savings  in  Time-Routing, 

Associated  Press  methods,  307-08; 
Essential  factors  in,  308;  Plant 
layouts,  309-10,  315;  Types  of 
manufacture,  310-12;  Storage 
and  passageway,  312;  Hugo  Die- 
mer  in  "Factory  Administra- 
tion," 312-13;  Transportation 
facilities,  312-13;  Allowing  for 
business  growth,  314;  Building 
expansion  and  layouts,  314-16; 
Gravity  utilization,  316-17;  Time 
schedules,  and  classes  of  manu- 
facture, 317-19 

Science  of  Management, 

Relation  of  manager  to  organiza- 
tion, 58-61;  Industrial  special- 
ization and  reorganization,  67- 
81;  Experiment  and  analysis,  72— 
78;  F.  W.  Taylor's  experiments, 
73,  77-78;  Cooperation  in  fit- 
ting men  into  jobs,  74-75,  80- 
81;  Cooperation  and  instruc- 
tion, 75,  80-81;  Theories  in- 
volved, 76;  Standards  of  ef- 
ficiency sought,  77-79;  Corpo- 
rate, staff  and  line  organization, 


Science  of  Management — continued 
86-96;  Divisional  control,  114- 
17;  Office  standards,  and  bonus 
systems,  127-29;  Organization 
charts  and  records,  132,  139— 
44;  Balance-of-stores  records, 
160-62;  Brandeis  on  standard 
routine  work,  209—10 ;  Inspec- 
tion and  research,  296-306 

See  also  Organization  of  Adminis- 
tration 

See  also  Savings  in  Time 

See  also  What  Management  In- 
volves 

Sources    of    Administrative    Informa- 
tion—Statistics   and    Inspection, 

Use  of  statistics,  285;  Graphs  and 
statistics,  285-86;  Graphic 
charts,  286-88;  Time  compari- 
sons and  curves,  287—88;  Re- 
ports, time  schedule  for,  289; 
Inspection  methods  of  Westing- 
house  Company,  290-93;  Quali- 
fied inspectors  needed,  293—94; 
Information  from  outside  sources, 
294;  Inspection  by  percentage 
system,  295 
Specialization, 

Organizing  ability  developed  by,  7; 
Outcome  of  supervision,  35;  Em- 
ployment expert,  46-48;  Com- 
plicates management,  68;  De- 
partment specialists,  69,  70,  71; 
Departmental  grouping,  and 
Fierce-Arrow  Company,  70-71 ; 
Factory  management  and  co- 
operation, 71-72,  74,  80-81; 
Administrative  specialists,  88- 
96;  Staff  and  military  manage- 
ment, 104-07,  129-30;  Planning 
department  a  requisite,  145-51 
Staff  and  Line  Organization,  Re- 
lation of  experts  to  general  man- 
ager, 92-94 
Standardization, 

Efficiency  tests  by  F.  W.  Taylor, 
77-80;  Office  efficiency  and  bonus 
systems,  127—29;  Office  func- 
tions and  equipment,  178-82; 
Wage  fixing,  226-37,  239-46 

See  also  below 
Standardization  and  Labor, 

Machine  versus  hand  labor,  213-14; 
Factors  conditioning  output,  214- 
15;  Processes  unlimited,  215; 
Determining  time  standards,  216— 
19;  Handling  time,  divisions  of, 
220-22;  H.  K.  Hathaway  gives 
data  on  handling  time,  221; 
Material-handling  time,  222-23; 


INDEX 


357 


Standardization  and  Labor — continued 
Assembling  time  wasted,  223-24 

Standardization  and  Rate-Fixing, 
\Vages  determined  by  standard 
time,  226-27;  Moral  responsibil- 
ity of  inspection,  227-29;  Trade- 
union  opposition,  229;  Premium 
systems,  methods  of  determining, 
229-32,  Employe  as  rate-fixer, 
230 ;  Employer  as  rate-fixer, 
230-33;  Wage  systems  in  Eng- 
land, 230,  233-37;  Halsey-Towne 
premium  system,  232;  F.  W.  Tay- 
lor and  piece-rate  system,  232, 
235;  S.  E.  Thompson  in  time- 
studies  for  wage  payments,  233; 
Progress  of  management,  233—35; 
F.  B.  Gilbreth  and  motion  study, 
233-35;  Rate-fixing,  English  and 
American  practice,  235—37 

Standardization — Materials  and  Equip- 
ment, 

Correct  standards  basis  for  judg- 
ment, 188;  Management  prob- 
lems, 188-89;  Determining  ef- 
ficiency, and  Carnegie  Steel  Com- 
pany, 189 ;  Harrington  Emerson, 
on  "Twelve  Principles  of  Ef- 
ficiency," 190,  192;  Labor  ef- 
ficiency, 190 ;  Improving  stand- 
ards, 191;  Adopting  efficiency 
standards,  191-92;  Standard 
.materials,  192-93;  Standard 
quantities,  193;  Commission  on 
Standardization  effects  savings, 
194;  Office  material  and  draw, 
ings,  194-95;  Machinery  and  re- 
pair parts,  196;  Delivery  systems, 
197;  C.  U.  Carpenter  on  inter- 
changeable parts,  197-98;  Engi- 
neering Standards  Committee  find- 
ings, 198;  Joseph  Whitmore  on 
interchangeable  parts,  198; 
"Limiting  dimensions"  system, 
199 

Standardization;     Symbols    and    Boa- 
tine, 

Symbol  systems  standards  of  mea- 
sure, 201-02;  Mnemonic  systems 
valuable,  202-04;  Derby  Desk 
Company  system,  203-05,  206- 
07;  Symbols  for  manufactur- 
ing, 205-06;  Newer  methods  of 
grouping,  207;  Time-study  and 
experience,  207-08;  Establishing 
routine,  209;  Brandeis  on  "Sci- 
entific Management,"  209—10; 
Technical  societies  promote  uni- 
formity methods,  210;  Records 
and  manuals  of  routine,  210-12 


Standards  of  Efficiency, 

Records  and  bonus  systems,  127—29, 
143;  L.  M.  Gilbreth  on  planning, 
169;  H.  A.  Hopf  on  office  or- 
ganization, 185-86;  Standard 
times  and  output,  213-25 
Supervision, 

Responsibility  of  the  administra- 
tor, 5-13;  Centralized  control 
and  collaboration  in  planning,  17- 
20;  Division  of  control,  26-32 

See  also  Executive  Supervision 

See  also  What  Management  In- 
volves 

Symbols   and  Routine,    See   Standard- 
ization;   Symbols  and  Routine 


Taylor,  F.  W., 

On  Science  of  investigation,  73,  77- 
78 ;  Piece-rate  system  of  wage 
rates,  229,  232,  241-42,  243; 
Methods  of  selecting  employes, 
247-48;  Determination  of  work 
and  rest  periods,  269;  Factors  in- 
fluence wages,  273;  Time-study 
methods,  299-300 

Thompson,   S.  E., 

Time  studies  fix  wage  rates,  233; 
Time-study  implements,  300-01 

Trade-Unions, 

Selection  and  turnover  of  em- 
ployes, 46-47;  Wage  adjust- 
ment, 52;  Relations  involved,  and 
growing  influence,  53;  Rate-fix- 
ing opposed  by,  229,  231 

Types  of  Management — The  Office 
Function  of  the  office,  120-22;  Ele- 
ments of  management  applied, 
122-24;  Duties  of  office  head, 
124-25;  Selection  and  handling 
of  employes,  125-27;  Welfare 
movement,  127;  Standards,  and 
bonus  systems,  127-29;  Military 
type  of  organization,  129—30; 
Functional  type  of  organization, 
130-32;  Committee  system,  133- 
34;  Suggestion  system,  134;  Ar- 
rangement and  lighting  of  of- 
fice, 135-37 


Wage  Systems, 

Rewards  and  distinctions,  43 ;  In- 
dustrial counselors,  46—47;  Ad- 
justment problems  and  the 
unions,  51—53 ;  Cost  records,  and 
scientific  management,  112; 
Planning  production,  147-48; 
Standard  time  records,  224;  Day 


INDEX 


Wage  Systems — continued 

and  piecework  plans,  239;  Pre- 
mium plan,  240 ;  Halsey  time 
plan,  240-41;  Taylor  differen- 
tial system,  241-43;  Efficiency 
plan  of  bonus  payments,  242- 
43 ;  Emerson  and  Taylor  plans 
compared,  243;  Fundamental 
rates  compared,  244^,  Time- 
study  and  premiums,"  relation 
between,  245 ;  Simple  bonus  plan, 
245—46;  Efficiency,  and  wages 
proportionate  to,  246 
See  also  Standardization  and  Rate 
Fixing 

Welfare. 

Conserving  human  energy,  61-62, 
266-69,  276-78;  Policies  for,  in 
factory  and  office,  127,  184;  and 
Educational  control,  253—63; 
Pension  funds,  281-82,  304 

Westinghouse    Electric    and    Manufac- 
turing       Company,        Inspection 


Westinghouse   Co. — continued 

methods     of,     290-93,     296,.    305 

What  Management  Involves, 

Manager  and  engineer,  difference  in 
abilities,  67;  Managers  over- 
taxed by  specialization,  68; 
Specialization  in  management,  69; 
Departmental  grouping,  70-71 ; 
Cooperation  complements  special- 
ization, 71—72;  Scientific  inves- 
tigation of  men  and  matter,  72— 
74;  Continual  study  and  prog- 
ress, 74-76;  Instructors  for 
•workers,  75,  80-81;  Science  of 
management,  what  it  involves, 
76;  F.  W.  Taylor,  and  science 
of  shoveling,  77-80,  215;  Reor- 
ganization for  new  standards, 
79 

Whitmore,  Joseph,  on   "Uniform  Sys- 
tem of  Screw  Thread,"   198 

Woolley,    E.    M.,    on    Stock    ledgers, 
346,    348 


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